Amendments imminent for reporting standards (AIFRS)
The 1st July 2021 will change things for companies following the Australian International Financial Reporting Standards (AIFRS). After this date, certain for-profit entities will no longer be able to apply minimal disclosures as part of the special purpose financial statements (SPFS) framework.
This will mainly affect large proprietary companies, unlisted public companies and others with a statutory obligation to prepare financials in accordance with Australian accounting standards. These affected organisations will need to prepare their financial statements using full AIFRS although they can apply the reduced disclosure requirements (RDR) framework.
Easing into the changes
To help ease this burden, the reduced disclosure requirements (RDR) framework is being replaced with a new simplified disclosure standard (SDS). The SDS is essentially the IFRS for SMEs but with some Australian specific changes, for example in relation to tax disclosure.
There will then be a 3-tier financial framework, whereby entities will either apply the full AIFRS, AIFRS with the SDS, or the SFPS framework.
Although this will initially affect only certain for-profit entities, the AASB is looking to extend the removal of the SPFS firstly to private-sector NFPs, and finally, the public sector, which may lead to a 4-tier framework to ease the burden on the smaller entities.
What does this mean for financial statement disclosure?
Many entities will be faced with increased disclosure requirements and a need for additional staff training to ensure that the financial statements continue to remain compliant with Australian accounting standards. To reduce this burden, Ideagen’s Pentana Disclose, which currently offers a full AIFRS financial statement disclosure checklist including RDR requirements, will be amended to reflect the new SDS framework.
Find out more about how our financial disclosure checklist, relied upon by 8 out of 10 top accountancy firms, can help you to navigate the AIFRS changes and complete the new required disclosures.