Not-For-Profit | Financial Reporting Insights

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AASBs become operative for NFPs as follows:

financialRemember that comparative and third statements of financial positions are required.

New AASB staff FAQs can help. They are:

  • Which standards are applicable to the recognition of income and revenue by NFP entities?
  • If I early-adopt AASB 9, AASB 15, AASB 16 or AASB 1058, what is the impact?
  • When would an NFP’s revenue be within the scope of AASB 15 Revenue from Contracts with Customers? and
  • If my entity performs research activities, which standard do I apply when accounting for grants received and when do I recognise revenue?

Answers at www.aasb.gov.au

The AASB has also released AASB 2018-3 Amendments to Australian Accounting Standards – Reduced Disclosure Requirements effective for annual periods beginning on or after 1 January.

The standard amends AASB 16 Leases (February 2016) and AASB 1058 Income of Not-for-Profit Entities (December 2016), establishing reduced-disclosure requirements for entities preparing general-purpose financial statements.

The Australian Accounting Standards Board has decided that proposals in the invitation to comment 39, (consultation paper Applying the IASB’s Revised Conceptual Framework and Solving the Reporting Entity and Special Purpose Financial Statement Problems) will apply only to for-profit entities.

As foreshadowed, an approach to removing special-purpose financial statements for NFP private-sector entities is dependent on ACNC legislation-review proposals and discussions on reporting requirements among the commission and states and territories.

After hearing feedback from the NFP sector and having had recent discussions with the ACNC and the other regulators, the AASB considers that proposals in ITC 39 are relevant for for-profit entities only.

The board will shift the focus of its roundtables this month to cover only the for-profit private sector.

While the aim to replace special-purpose financial statements with a simple, comparable, proportionate, transparent financial-reporting framework remains unchanged, the board has recognised that the journey for NFP private-sector entities will be very different from that of the for-profit private sector.

The AASB will continue to research optimal outcomes, collaborate with regulators, and regularly consult with NFPs to ensure a simple and fair framework and a smooth transition for NFP private-sector entities.

The impact of removing special-purpose statements is significant, options need to be considered, and more time is needed to consider the best outcome for the NFP private sector.

The AASB will soon release a document containing targeted proposals for NFP private-sector entities.

The removal of special-purpose financial statements is expected to have little impact in the NFP public sector.  The AASB’s preference is to pursue financial-reporting reform in the public sector via consultation based on discussion paper Improving Financial Reporting for Australian Public Sector.

NFPs should:

  • In the short term – you have extra time to explore the recommendations set out in the ACNC legislation review and there is no need to comment on phase 2 of ITC 39 as this will apply only to for-profit entities
  • In the medium term – the AASB will issue a consultation document on reporting options open to NFP private-sector entities, and
  • In the long term – a simple, comparable, proportionate, transparent financial-reporting framework for NFPs will become available.

To read our other insights, please return to our VIN-spiration: Spring 2018 homepage.

An Important Message

While every effort has been made to provide valuable, useful information in this publication, this firm and any related suppliers or associated companies accept no responsibility or any form of liability from reliance upon or use of its contents.  Any suggestions should be considered carefully within your own particular circumstances, as they are intended as general information only.

 

 

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