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Jun 02, 2023 / News

Business Consulting / Financial Reporting

Beyond the Numbers - Edition 5 2023

Click on one of the Newsletter sections below:

1. Top Story

2. Local Reporting

3. Regulations

4. International News

5. In Case You Missed it

 

Financial Reporting Update | Webinar Recording

If you missed Nexia Australia’s annual Financial Reporting Update webinar on 1 June, you can view the recording and download the materials covering:

  • The key accounting standards changes for 30 June 2023;
  • How recent changes will affect the classification of loans with annual review clauses, covenants and other conditions;
  • Legislative changes affecting companies, ACNC registered charities, and other not-for-profit entities; and
  • The latest on sustainability and climate-related disclosure projects.

Access Recording >>

 

Not-for-Profit Private Sector Financial Reporting Framework

At its board meeting on 4 May, the Australian Accounting Standards Board (AASB) considered the feedback received on the Discussion Paper Development of Simplified Accounting Requirements (Tier 3 Not-for-Profit Private Sector Entities) and decided to proceed with the development of an Exposure Draft on: 

  • a Tier 3 Accounting Standard with simplified accounting requirements for smaller not-for-profit private sector entities; and
  • removing the ability of certain not-for-profit entities to prepare special purpose financial statements under Australian Accounting Standards. 

Read More >>

 

Service Performance Reporting

The AASB considered a range of preliminary issues relating to developing a project plan for this reactivated project and decided to use the New Zealand Accounting Standard NZ PBE FRS 48 Service Performance Reporting as the primary point of reference for detailed work on this project and a number of working assumptions. 

The appropriateness of NZ PBE FRS 48 as the primary point of reference and the working assumptions will be reassessed as the project progresses and further information becomes available through further research and stakeholder outreach. 

The Board will consider a draft project plan at a future meeting.

Read More >>

 

Research on intangible assets of Australian listed entities

The AASB and the Australian Auditing and Assurance Standards Board (AUASB) published a joint research report that examined the significance of recognised intangible assets on the balance sheets of Australian listed entities.

The report explores the frequency, magnitude and nature of intangible assets recognised by entities listed on the Australian Securities Exchange (ASX). The report also identifies the frequency of key audit matters related to intangible assets in auditor’s reports to provide insights into the areas that auditors are focusing on.

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ASIC takes action on greenwashing

The Australian Securities and Investments Commission (ASIC) has issued report detailing the 35 interventions it has made in response to its greenwashing surveillance activities from 1 July 2022 to 31 March 2023.

During this period, ASIC intervention resulted in 23 corrective disclosure outcomes, 11 infringement notices issued, and in one case, the commencement of civil penalty proceedings.

The report also provides transparency on the nature of the matters where ASIC has intervened with reference to net zero statements and targets and the use of terms such as ‘carbon neutral’, ‘clean’ or ‘green’.

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OECD Pillar Two minimum tax reform

The 2023-24 Budget noted that the Federal Government will proceed with implementation of the OECD Pillar Two minimum tax regime, with the Income Inclusion Rule and a domestic minimum tax applying to income years beginning on or after 1 January 2024. The Pillar Two rules ensure that large multinational companies would be subject to a minimum 15% tax rate. 

The Pillar Two reforms will apply to entities that have global revenue of at least EUR750 million per annum (approximately A$1.2 billion). 

As noted below, the IASB has amended IAS 12 Income Taxes to address the impact of these changes.

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IASB amends tax accounting requirements ahead of Pillar Two tax changes

The International Accounting Standards Board (IASB) has amended IAS 12 Income Taxes to give companies temporary relief from accounting for deferred taxes arising from the OECD Pillar Two international tax reforms.  The Pillar Two rules ensure that large multinational companies would be subject to a minimum 15% tax rate. The Federal Government has committed to implementing the Pillar Two tax changes.
The accounting amendments introduce:

a temporary exception to the accounting for deferred taxes arising from jurisdictions implementing the global tax rules; and
targeted disclosure requirements to help investors understand a company’s exposure to income taxes arising from the reform.

The AASB is expected to issue equivalent amendments to AASB 112 Income Taxes soon.

Read More >>

Amendments to IAS 7 and IFRS 7 require disclosure of Supplier Finance Arrangements

The IASB has amended IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures to require disclosure of information about an entity’s supplier finance arrangements (also known as supply chain finance, payables finance or reverse factoring arrangements).

The new disclosures are designed to enable users of financial statements to assess the effects of those arrangements on the entity’s liabilities and cash flows. 

The IASB amendments apply for annual reporting periods beginning on or after 1 January 2024.  Local amendments are expected to be issued by the AASB in the coming weeks.

Read More >>

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International Accounting Standards Board (IASB) meeting – April 2023

The summary of the IASB meeting held on 25 – 27 April 2023 has been released.  Key topics discussed include: 

  • Financial Instruments with Characteristics of Equity – the IASB completed its deliberations and agreed to proceed with an Exposure Draft of proposed changes and clarifications to IAS 32 Financial Instruments: Presentation and IFRS 7 Financial Instruments: Disclosures.
  • Application issues in applying the Equity Method – the IASB tentatively decided to propose that an investor would account for, and include in the carrying amount of its investment in an associate, a deferred tax asset (or liability) arising from recognising its share of the associate’s net identifiable assets and liabilities at fair value.  It also agreed to develop answers to application questions about the equity method.
  • Post-implementation Review of IFRS 9 – Impairment. The IASB approved the publication of the Request for Information for public comment and set a 120-day comment period. 
  • Targeted improvements IAS 37 Provisions, Contingent Liabilities and Contingent Assets - The IASB discussed possible amendments to the requirements and guidance supporting the ‘present obligation’ criterion for recognising a provision but did not make any decisions.

The Board also finalised the IFRIC Agenda Decision regarding how to assess whether a contract contains a lease under IFRS 16 Leases when the supplier has particular substitution rights. The final Agenda Decision will be published on the IASB website.

Read More >>

 

International Sustainability Standards Board (ISSB) Update 

The ISSB met on 18 May 2023 when it approved amendments to the climate-related SASB Standards to: 

  1. align them to the industry-based guidance in IFRS S2 Climate-related Disclosures; and
  2. amend the language of climate-related reporting metrics to enhance their international applicability.

The ISSB expects to issue the amendments to the climate-related SASB Standards and IFRS S1 and IFRS S2 in June 2023.

Read More >>

 

International Federation of Accountants (IFAC) releases new guidance on greenhouse gas reporting

New guidance to help professional accountants and finance professionals prepare for greenhouse gas (GHG) reporting has been released by the IFAC and We Mean Business Coalition (WMBC), in partnership with Accounting for Sustainability (A4S), Global Accounting Alliance (GAA) and World Business Council for Sustainable Development (WBCSD).

The first part of the guidance provides finance and accounting professionals with a roadmap to engage with others across their business to prepare for GHG emissions reporting requirements aligned to financial reporting processes. The second provides technical guidance to collect and enhance the quality of data related to all scopes of GHG emissions at the individual entity and group levels.

These publications have been released in preparation for the upcoming international standards requiring GHG reporting and information related to climate risks and opportunities. These include the International Sustainability Standards Board (ISSB) General Sustainability-related Disclosures (IFRS S1) and Climate-related Disclosures (IFRS S2), amongst others. 

Read More >>

Federal Budget 2023 – Webinar recording

You can view the recording of Nexia Australia’s Budget briefing held on 11 May which explained the:

  • Government’s plans for providing cost-of-living relief without adding to inflation;
  • Key announcements affecting businesses, business owners, and high net worth individuals; and
  • the Government’s broader economic agenda.

Access Recording >>

 

We’re here to support you.

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 Advisor.

The material contained in this publication is for general information purposes only and does not constitute professional advice or recommendation from Nexia Edwards Marshall. Regarding any situation or circumstance, specific professional advice should be sought on any particular matter by contacting your Nexia Edwards Marshall Adviser.