In a recent pivotal meeting held on 11 October 2023, the Australian Accounting Standards Board (AASB) made significant strides in shaping the nation’s financial reporting landscape. Here’s a breakdown of the key decisions that will influence how businesses and entities disclose critical information:

1. Climate-related Financial Disclosure – Exposure Draft

The AASB approved the publication of Exposure Draft ED SR1 Australian Sustainability Reporting Standards. This draft, expected to be released shortly, includes three proposed Australian Sustainability Reporting Standards:

• [draft] ASRS 1: General Requirements for Disclosure of Climate-related Financial Information
• [draft] ASRS 2: Climate-related Financial Disclosures
• [draft] ASRS 101: References in Australian Sustainability Reporting Standards

Crucially, modifications were proposed in ASRS 1 and ASRS 2, including directives for entities to disclose their climate-related risks and opportunities comprehensively. Entities must also prioritize local methodologies for measuring GHG emissions and assess climate resilience against ambitious global temperature goals.

1. Tier 2 – Supplier Finance Arrangements and Lack of Exchangeability

The AASB introduced an Exposure Draft proposing amendments to AASB 1060, mandating Tier 2 entities to disclose information regarding their supplier finance arrangements. While these disclosures become mandatory from 1 January 2024, entities can opt for earlier application.

Interestingly, the Board opted not to impose additional disclosure requirements regarding the effects of non-exchangeable currencies on financial statements for Tier 2 entities.

1. Not-for-Profit Domestic Post-implementation Reviews

The Board discussed a framework to ensure consistent decision-making during post-implementation reviews. Stakeholder feedback, particularly from Invitation to Comment ITC 50 on the income of not-for-profit entities, was a focal point. Future actions based on this feedback will be discussed in subsequent meetings.

1. Post-implementation Review of IFRS 15

The Board acknowledged the impending deadline for submissions on the Post-implementation Review of IFRS 15 Revenue from Contracts with Customers. A dedicated sub-committee was appointed to finalize the Board’s submission to the IASB, emphasizing the importance of industry input in shaping global accounting standards.

1. Recently Approved Documents

Since the last update in September 2023, the Board has approved several Standards, Exposure Drafts, and proposal documents, indicating the continuous evolution of accounting standards in Australia.

In conclusion, the decisions made by the AASB on 11 October 2023 mark a progressive step towards enhancing financial transparency and accountability in Australia. Stay tuned as these changes unfold, reshaping how businesses report their financial information and contribute to a more sustainable future.

References:

Australian Accounting Standards Board. (2023, October 11). Action Alert: AASB Board Meeting (226). Retrieved from https://www.aasb.gov.au/media/0uzn1j1f/226-actionalert.pdf