The End is Nigh  – No more special purpose financial statements (SPFS) for many entities

Our content expert, Carmen Ridley provides a timely review of the future demise of the SPFS reporting format, in a bid by the AASB to ” find a solution to improve the consistency, comparability, usefulness and credibility of financial reporting in Australia”.

SPFSs Likely to be Dropped from Reporting Formats?

Two-phased approach of Conceptual Framework in Australia

The recent release of the IASB Revised Conceptual Framework (RCF)  contains a definition of reporting entity which conflicts with our Australian definition.  The AASB has released a consultation paper which will remove the ability for many entities to prepare special purpose financial statements. Australia is unique in that our current reporting entity concept allows entities to self-assess their reporting status and therefore the content of their financial statements and compliance with accounting standards. The preferred option for the release of the revised Conceptual Framework in Australia is a two-phased approach (although other options are provided in the consultation paper).  A brief overview of the two phases is provided in the table below.

Impact for Phase 2 entities:

Phase 2 would mean that entities who are required to prepare financial statements under the legislation, for example:

  • Companies;
  • ACNC registered entities;
  • State Regulated entities
Impact for Phase 2 entities

and entities who are otherwise to prepare financial statements in accordance with Accounting Standards, for example constituting documents such as Trust Deeds, will be impacted.

What will general purpose financial statements (GPFS) look like in the future?

Changes to Tier 1 GPFS, Tier 2 and the introduction of a Tier 3.

AASB will retain Tier 1 GPFS however, the consultation paper discusses some potential changes to existing Tier 2 and maybe the introduction of a Tier 3.

Next steps

GET INVOLVED – this is a ‘live, hot off the press’ issue and the AASB want to hear from you. Briefing sessions are going to be held in Melbourne, Sydney, Adelaide, Brisbane and Perth in May followed by roundtables later in the year. AASB staff are happy to speak to, interact on LinkedIn with, receive emails or comments letters from interested parties to ensure that this project provides the right outcome for Australia. Click here to access the AASB Consultation Paper. Caseware will be closely monitoring this project and will make amendments to the Caseware Financial Statements Templates when required. For further information please contact our financial reporting content provider and member of the AASB, Carmen Ridley via