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Beyond the Numbers | Edition 3

Welcome to Beyond The Numbers, our monthly newsletter which brings you a summary of the latest developments from local and international standard setters and regulators.

Remaking of ACNC Regulations

The Australian Charities and Not-for-profits Commission Regulations 2013 automatically sunset on 1 April 2023.  As a result, Treasury has remade the regulations as the Australian Charities and Not-for-profits Commission Regulations 2022, which are effective from 1 April 2023. There are minimal changes to the substantive requirements of the 2013 Regulations.

As a result:

  • Financial reports for the 31 December 2022 financial year signed on or after 1 April 2023 are prepared using the 2022 Regulations; and
  • Financial reports for the 2022-23 financial year and beyond apply the 2022 Regulations.


AASB Board Meeting – March 2023

The Australian Accounting Standards Board (AASB) met on 8-9 March and made the following key decisions:

  • To issue an Exposure Draft proposing amendments to AASB 1060 relating to the classification of non-current liabilities with covenants for Tier 2 financial reports consistent with amendments already made to AASB 101 Presentation of Financial Statements by AASB 2020-1 and AASB 2022-6.
  • To support the draft Franking Credit Disclosure project plan. The Board decided that the project’s scope should be limited to Tier 1 for-profit entities and that further evidence and stakeholder engagement is needed before it can decide on any standard-setting work;
  • The Board deliberated its response to the IASB Exposure Draft ED/2023/1 International Tax Reform – Pillar Two Model Rules (AASB ED 322). The Board supported the proposed mandatory temporary exception for deferred tax accounting in relation to Pillar Two taxes, but recommended additional disclosures.


AASB Sustainability Reporting Project

At its meeting on 8-9 March 2023, the AASB noted the complexities and challenges associated with industry classifications and industry-based disclosure requirements contained in [Draft] IFRS S2 Climate-related Disclosures being based on and referring to SASB (the former Sustainability Accounting Standards Board).

The AASB decided to remove references to SASB Standards from its Sustainability Disclosure Standards and not to publish industry-based illustrative examples until:

(a)    the content has been comprehensively internationalised by the ISSB; and

(b)   the content has undergone the AASB’s due process in Australia.

The AASB also supported the Climate-related Financial Disclosure project plan, which included a revised project timeline. That timetable envisages final standard/s to be issued in H1 2024.


Treasury proposes enhanced disclosure of subsidiary information

The Australian government announced a tax transparency measure for all Australian public companies (listed and unlisted) to disclose information of the name, legal form, percentage ownership, and country of tax domicile of each subsidiary.

Such disclosure would be additional to any requirements of Australian Accounting Standards.

Treasury is seeking stakeholders’ views on the exposure draft legislation and accompanying explanatory material implementing this measure.

Submissions close on 13 April 2023.


ASIC continues its focus on improved material business risk disclosure in annual reports

The Australian Securities and Investments Commission’s (ASIC) ongoing financial reporting surveillance program and inquiries of a selection of 30 June 2022 annual reports has led to 16 listed entities making additional material business risk disclosures through market announcements or subsequent interim financial reports.

ASIC reminds directors of the importance of a high-quality operating and financial review, including disclosure of material risks that may affect the achievement of a listed entity’s strategies and prospects.


ASIC publishes report on good practices for handling whistleblower disclosures

ASIC published a report which sets out the good practices ASIC observed from its review of seven entities’ whistleblower programs from a cross-section of industries.

Since 1 January 2020, the Corporations Act has required public companies, large proprietary companies, and trustees of registrable superannuation entities to have a whistleblower policy that sets out matters and to make that policy available to its officers and employees.


ASX Market Announcements Office closes one hour earlier from the end of Daylight Saving Time

From Monday 3 April 2023, the Australian Securities Exchange (ASX) Market Announcements Office will open at 7:00am AEST and close at 7:30pm AEST on each trading day.

Entities are reminded that periodic reports must be lodged before the Market Announcements Office closes on the business day when the report is due, or the entity’s securities will be suspended from trading on the next trading day.


International Accounting Standards Board (IASB) Update – March 2023

The IASB met on 20 – 23 March 2023 when it continued discussion of the following projects:

  • Business combinations – Areas of potential change to IAS 36 Impairment of Assets to reduce the cost and complexity of the impairment test of cash-generating units containing goodwill, and the potential removal of some disclosure requirements from IFRS 3 Business Combinations;
  • Equity method of accounting – The accounting for the purchase of an additional interest in an associate while retaining significant influence, and perceived conflicts between IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures;
  • Primary Financial Statements – To redeliberate the proposals in its Exposure Draft General Presentation and Disclosures relating to the disclosure of operating expenses by nature, management performance measures, categories in the statement of profit or loss, and proposals for entities that provide financing to customers as a main business activity.


IFRS Interpretations Committee (IFRIC) Update – March 2023

IFRIC met on 14-15 March and made the following key decisions:

  • Lessee accounting for lease payments forgivenIFRIC previously discussed the application of IFRS 9 Financial Instruments and IFRS 16 Leases in accounting for a rent concession in which the only change to a lease contract is the lessor’s forgiveness of lease payments due from the lessee under that contract.At this meeting, the Committee recommended the IASB amend the definition of ‘lease modification’ in IFRS 16 and make consequential amendments to IFRS 9.
  • Definition of a Lease—Substitution RightsThe Committee considered feedback on its tentative agenda decision published in November 2022 and referred the matter to the IASB for finalisation at its April meeting.

IFRIC issued three tentative agenda decisions which are open for comment until 22 May 2023:

  • Insurance Premiums Receivable from an Intermediary (IFRS 17 and IFRS 9);
  • Guarantee over a derivative Contract (IFRS 9); and
  • Homes and Home Loans Provided to Employees (IAS 19 and IFRS 9).


Task Force on Climate-Related Financial Disclosures (TCFD)

The new climate standards being developed by the ISSB are based on the TCFD climate-related framework and disclosures.

The TCFD recommendations are structured around four thematic areas that represent core elements of how organisations operate: governance, strategy, risk management, and metrics and targets.

Chartered Accountants Australia and New Zealand has provided a summary of the TCFD recommendations and resources to assist entities prepare for the ISSB’s climate-related disclosure standards.


IASB Proposes Amendments to IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures

The IASB has issued an Exposure Draft to amend IFRS 9 and IFRS 7 to:

  • address accounting for the settlement of a financial asset or a financial liability using an electronic payment system, and the requirements for assessing contractual cash flow characteristics of financial assets; and
  • amend disclosures for investments in equity instruments designated at fair value through other comprehensive income, and financial instruments with contractual terms that could change the timing or amount of contractual cash flows on the occurrence (or non-occurrence) of a contingent event.

Submissions close on 19 July 2023


ASIC Launches First Court Proceedings Alleging Greenwashing

ASIC has launched its first court action against alleged greenwashing conduct, commencing civil penalty proceedings in the Federal Court against Mercer Superannuation (Australia) Limited for allegedly making misleading statements about the sustainable nature and characteristics of some of its superannuation investment options.  Greenwashing refers to overrepresenting the extent to which practices are environmentally friendly, sustainable, or ethical.

ASIC Deputy Chair Sarah Court said, ‘This is the first time ASIC has taken an Australian entity to court regarding alleged greenwashing conduct, and it reflects our continuing efforts to ensure sustainability-related claims made by financial institutions are accurate.’


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If you would like to discuss further any of the information provided in these updates and how it may impact you, please contact your Nexia Edwards Marshall NT Advisor.

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