AUDIT UPDATE - NEW DISCLOSURE STANDARD MIGHT REPLACE RDR

The AASB is proposing to replace reduced-disclosure requirements with a new disclosure standard.

Exposure draft 295 General Purpose Financial Statements – Simplified Disclosures for For-Profit and Not-for-Profit Tier 2 Entities proposes that the standard would apply to entities that report under Tier 2 of the differential-reporting framework set out in AASB 1053 Application of Tiers of Australian Accounting Standards.

The simplified-disclosure standard is based on international counterparts and adapted for differences in recognition and measurement requirements.  It will also accommodate NFPs' specific circumstances.

The proposals in draft 295 will not change which entities are permitted to apply Tier 2 reporting requirements and their recognition and measurement requirements, which are the same as for Tier 1.

Draft 295 is proposed in conjunction with a forthcoming draft on the proposed removal of special-purpose financial statements.  The result will reduce disclosures required and therefore the cost for entities that have to transition from SPFSs to general-purpose counterparts if the AASB's proposal to remove SPFS is implemented.

The proposals will also provide some immediate relief for public-sector and NFP private-sector entities that are currently reporting under the reduced-disclosure regime.  

They are not intended to replace the AASB's separate project of reshaping financial-reporting frameworks for the NFP private and public sectors, and further changes might be suggested following AASB consultations with other NFP regulators.