differential reporting proposals
CPA Australia has announced it opposes the Australian Accounting
Standards Board’s (AASB) proposed removal of the reporting entity
The AASB proposes to differentiate between those entities that
have to apply all accounting standards and those that do not, based
on a number of factors, including public accountability and whether
the entities are preparing general-purpose financial reports
(GPFR). AASB technical director Angus Thomson said under the
proposals there would be two types of GPFR – one that involves
applying all the standards and another that involves applying a
form of SME standard.
The proposal was based on the manner in which the IASB
characterised GPFR, however, CPA Australia said subsequent IASB
decisions have “superseded the thrust of the AASB’s proposals”. The
institute’s chief executive, Geoff Rankin, said the reporting
entity concept plays an important role in Australia and should be
“Throwing out the reporting entity concept would impose additional
costs on entities, without corresponding benefits,” he said.
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Rankin also recommended the AASB improve the reporting entity
concept, in order to make it “more robust”. “The reporting entity
concept needs to be tightened to guard against errors of judgement
or deliberate misclassification,” he said.
CPA Australia suggested the AASB consider improvements to the
reporting entity concept such as a statement by the directors
specifying their reasons for classifying the entity as a
non-reporting entity and/or requiring a non-reporting entity
statement by shareholders.
Thomson said the AASB welcomes the input of the professional
accounting bodies and added that all input would be taken into
consideration. He said the institute’s recommendations are a useful
contribution to the debate, “particularly since some of the
existing concerns with the reporting entity concept relate to its