Be aware of important developments
AASB finalises Pillar Two amendments for Tier 2 financial reports
At its September 2023 meeting, the AASB agreed to finalise amendments to AASB 1060 General Purpose Financial Statements – Simplified Disclosures for For-Profit and Not-for-Profit Tier 2 Entities to introduce additional requirements in Tier 2 financial reports for ‘Pillar Two’ income taxes.
The amendments require Tier 2 entities to state they have applied the exception to recognising and disclosing information about deferred taxes related to Pillar Two income taxes and also disclose its current tax expense related to Pillar Two income taxes.
The AASB agreed to amendments that align with recent decisions the IASB made in relation to the IFRS for SMEs (on which AASB 1060 is based) and to provide additional explanation of how Tier 2 entities can respond to the requirements for 30 June 2023 and other periods ending before 30 September 2023 (when the amendments will become effective).
For more information, see our Clarity publication Responding to Pillar Two.
ACNC AIS and financial report review
The Australian Charities and Not-for-Profits Commission (ACNC) has recently published the outcomes of its review of charities’ annual information statement (AIS) and annual financial reports for the 2021 reporting period.
The review for this period was expanded to include examination of the reporting of related party transactions and key management personnel compensation in annual financial reports. The ACNC is expected to continue to focus on these disclosures for the 2022 and 2023 reporting periods as they are required for the first time for more entities.
The review identified a number of improvements over prior years, but identified a number of observations where compliance had reduced or disclosure issues were identified. New observations included that related party disclosures were largely correctly disclosed, some early adoption of AASB 1060 and a trend away from review reports to audit reports.
More information can be found on the ACNC website. We have also recently published Clarity publication Not-for-profit 2023 financial reporting update which discusses key issues for not-for-profit entities and is a useful resource for not-for-profit entities in responding to the ACNC’s surveillance.
IOSCO endorses IFRS Sustainability Disclosure Standards
In a final step toward global adoption, the International Organization of Securities Commissions (IOSCO) has endorsed IFRS Sustainability Disclosure Standards IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures.
In the media release announcing the endorsement, IOSCO calls upon its 130 member jurisdictions (which includes Australia) to “consider ways in which they might adopt, apply or otherwise be informed by the ISSB Standards… in a way that promotes consistent and comparable climate-related and other sustainability-related disclosures for investors”.