• Andrew Clarke

Financial reporting updates

Changes to special purpose reporting and release of new accounting standards


AASB has introduced new simplified reporting regime by issuing:

  • AASB 2020-2 Amendments to Australian Accounting Standards – Removal of Special Purpose Financial Statements for Certain For-Profit Private Sector Entities.

  • AASB 1060 General Purpose Financial Statements – Simplified Disclosures for For-Profit and Not-for-Profit Tier 2 Entities.

The purpose of this standard is to introduce simplified disclosure framework based on IFRS for SME’s (small and medium enterprises) and reduce disclosures required compared to General Purpose Tier 1 and Reduced Disclosure Regime (RDR).


Impact on entities


AASB 1060 will replace RDR regime and all NFP entities that currently prepare Tier 2 GPFS will be required to transition to the new standard on the mandatory application date.


Please note that AASB 1060 does not apply to entities that prepare Tier 1 GPFS and NFPs that prepare special purpose financial statements (SPSF) with the exception of not-for-profit entities registered as charity with Australian Charities and Not-for-profits Commission or public companies limited by guarantee.


Application date


AASB 1060 applies to financial years beginning on or after 1 July 2021, i.e. full financial years ending 30 June 2022 and beyond.


Early adoption is permitted and encouraged as it will attract transitional relief from disclosing comparative information.


Reporting timelines


ASIC has extended the financial reporting deadline for listed and unlisted entities by one month under the Corporations Act 2001 (Corps Act) for balance dates up to and including 7 July 2020.


Further, on 3 June 2020 the ASX granted an equivalent class waiver to listed entities to enable them to take advantage of the deadline extension for lodging full year and half-year financial reports provided by ASIC for balance dates up to and including 7 July 2020. However, the waiver imposes certain additional conditions to ASIC’s relief.


ASIC relief does not apply to registered foreign companies.


It is encouraged by ASIC and the ASX to lodge within the normal statutory deadlines, having regard to the information needs of shareholders, creditors and other users of their financial reports.


It was also advised by ASIC that it will continue to monitor COVID-19 situation and market conditions and may issue updated guidance in the future.


Action points

  • Market announcement that the entity is relying on ASIC relief to extend the lodgement of its accounts and explanation why the relief has been relied upon.

For further detailed information refer to ASIC Instrument https://asic.gov.au/about-asic/news-centre/find-a-media-release/2020-releases/20-113mr-asic-to-further-extend-financial-reporting-deadlines-for-listed-and-unlisted-entities-and-amends-no-action-position-for-agms/ and ASX Class Waiver https://www.asx.com.au/documents/asx-compliance/final-asx-class-waiver-extended-reporting-and-lodgment-deadlines-03-06-20.pdf


Australian Charities and Not-for-Profits Commission (ACNC) compliance during COVID-19


Due to the challenges posed by COVID-19, ACNC has made following significant announcements:

  • ACNC will not investigate certain breaches of the Governance Standards and the External Conduct Standards that occur from 25 March until 25 September 2020.

  • A blanket extension to charities with a 2019 annual information statement (AIS) due between 12 March and 30 August 2020. These charities can now submit their AIS by 31 August 2020.

Right-of-use lease assets to count in satisfying AFS licensee requirements


Application of AASB 16 Leases gives rise to a Right-of-Use Asset on the balance sheet and at the same time lease liability is recorded.


In Dec 2019 ASIC statement on this issue as part of press release was following:


"Many Australian Financial Services (AFS) Licensees are subject to financial condition requirements that may be affected by the new standards. For example, a net tangible assets requirement would include lease liabilities, but intangible assets such as a lease Right-Of-Use Asset would not be counted in meeting that requirement."


This caused issues for some AFS licensees who faced difficulty in complying with their financial requirements due to the exclusion of Right-of-Use Asset from the financial requirement calculation as Right-of-Use Asset is identified as intangible asset.


However on no-action position was issued by ASIC on 7 July 2020 which states that ASIC will take no regulatory action in relation to a breach of a financial resource requirement by an AFS licensee if the breach was caused by the AFS licensee’s inability to use a Right-Of-Use Asset to satisfy the financial resource requirement and that inability arises from recent changes to the accounting treatment of lease assets as a result of AASB 16.


For the purposes of the no-action position, the main financial resource requirement in addition to many others is ‘net tangible assets (NTA) requirement’.


If you need assistance with financial reporting and related regulatory requirements, please contact our financial reporting and advisory specialists.


Awais Ur Rehman Nancy Lau

Partner - Audit, Assurance and Risk Advisory Associate Director-Audit & Assurance

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