Australian regulators have released
wide-scale proposals, including a two-tier reporting system, to
help reduce corporate reporting burdens for most Australian
companies.
The proposals have been broadly welcomed by
Deloitte Australia, although the firm says the level of reporting
may increase for some companies.
The Australian Accounting Standards Board
(AASB) last month released a consultation paper that identifies two
options for reducing the financial reporting burden for SMEs.
One option is to develop a second tier of
reporting requirements for these entities. This option maintains
the full measurement and recognition criteria in IFRS but
introduces substantially reduced disclosure requirements that are
modelled on IFRS for SMEs.
The other option is adopting IFRS for SMEs as
issued by the International Accounting Standards Board.
If one of the proposals is adopted, only
publicly accountable entities in the for-profit private sector and
specified major reporting entities in the public sector will have
to follow full IFRS.
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By GlobalDataDeloitte Australia technical partner Bruce
Porter said the proposals offer real reductions in the red tape
associated with financial reporting. However, he said Australian
entities should not consider these reforms a panacea for complaints
about the voluminous disclosure regime faced by entities complying
with IFRS.
“Without an increase in the thresholds for
small proprietary companies and an extension of the ‘small’ concept
to unlisted public companies, many companies may face a sharp
increase in the size and content of their financial reporting
obligations, leading to significant cost increases,” Porter
said.
“This is a real change in direction for the
AASB, biased towards the level of disclosure needed for independent
users of financial statements.”
The proposals come at a time when the
Australian government is also seeking comment on wide-ranging
changes to its Corporations Act.
Proposed changes would introduce a three
tiered sliding scale financial reporting regime for Australia’s
11,000 companies limited by guarantee. Companies limited by
guarantee are predominantly not-for-profit entities, such as
charities, and sporting and recreational bodies.
The AASB consultation paper will remain open
for comment alongside an accompanying exposure draft, which is
expected to be released in stages.
The AASB plans to amend the standards by June
2010, so that entities could apply the amendments early for June
year ends.
Nicholas Moody
