AASB 1048

Obtaining a copy of this Accounting Standard

This Standard is available on the AASB website: www.aasb.gov.au.

Australian Accounting Standards Board
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Collins Street West
Victoria   8007
AUSTRALIA

Phone:       (03) 9617 7600
E-mail:       [email protected]
Website:    www.aasb.gov.au

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© Commonwealth of Australia 2020

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The Australian Accounting Standards Board (AASB) is an Australian Government entity under the Australian Securities and Investments Commission Act 2001.  The AASB develops, issues and maintains Australian Accounting Standards, including Interpretations.  These are to be applied by:

(a)         entities required by the Corporations Act 2001 to prepare financial reports;

(b)         governments in preparing financial statements for the whole of government and the General Government Sector (GGS); and

(c)         entities in the private or public for-profit or not-for-profit sectors that are reporting entities or that prepare general purpose financial statements.

AASB 1053 Application of Tiers of Australian Accounting Standards establishes a differential reporting framework consisting of two tiers of reporting requirements for preparing general purpose financial statements:

(a)          Tier 1: Australian Accounting Standards; and

(b)          depending on the reporting period, either of the following:

(i)           Tier 2: Australian Accounting Standards – Reduced Disclosure Requirements (for reporting periods beginning before 1 July 2021);

(ii)          Tier 2: Australian Accounting Standards – Simplified Disclosures (for reporting periods beginning on or after 1 July 2021, with earlier adoption permitted).

This Standard identifies the Australian Interpretations and classifies them into two groups: those that correspond to an International Accounting Standards Board (IASB) Interpretation and those that do not.  Entities are required to apply each relevant Australian Interpretation in preparing financial statements that are within the scope of the Standard.

In respect of the first group (Table 1), it is necessary for those Australian Interpretations, where relevant, to be applied in order for an entity to be able to make an explicit and unreserved statement of compliance with International Financial Reporting Standards (IFRS Standards).  The IASB defines IFRS Standards to include both IFRIC and SIC Interpretations.

In the second group (Table 2), this Standard lists the other Australian Interpretations, which do not correspond to the IASB Interpretations, to assist financial statement preparers and users to identify the other authoritative pronouncements necessary for compliance in the Australian context.

This Standard (see Table 3) also updates references to conceptual framework pronouncements in other Standards to refer to amended versions of the pronouncements, as identified in this Standard.

The Standard will be reissued or amended when necessary to keep the Tables up to date.

When does it apply?

This Standard is applicable to annual reporting periods ending on or after 31 December 2020 (see paragraph 2).  Earlier application is permitted as specified in paragraph 3, subject to paragraphs 7, 9, 11 and AusCF11 of this Standard.

What are the changes?

This Standard (issued in December 2020) supersedes the previous version of AASB 1048, issued in December 2017 and amended to March 2020.

The main differences between the previous version (as amended) and this version include:

(a)         the removal from Tables 1 and 2 of versions of Interpretations that do not apply to any of the reporting periods to which this Standard mandatorily applies (see paragraph 2);

(b)         the removal from Tables 1 and 2 of Interpretations that have been superseded by AASB 9 Financial Instruments, AASB 15 Revenue from Contracts with Customers or AASB 16 Leases;

(c)         the addition of amended versions of Interpretations in Tables 1 and 2, where applicable to any reporting period to which this Standard mandatorily applies.  This reflects amended versions of Interpretations arising as a result of the deferral of AASB 17 Insurance Contracts and its consequential amendments, and consequential amendments arising from the issuance of AASB 2019-1 Amendments to Australian Accounting Standards – References to the Conceptual Framework and AASB 1060 General Purpose Financial Statements – Simplified Disclosures for For-Profit and Not-for-Profit Tier 2 Entities; and

(d)         the addition of an amended version of the Framework for the Preparation and Presentation of Financial Statements in Table 3 as a result of the issuance of AASB 2018-7 Amendments to Australian Accounting Standards – Definition of Material.

This Standard clarifies that all Australian Interpretations have the same authoritative status.  Those that incorporate the IASB Interpretations must be applied to achieve compliance with IFRS Standards.  Australian Interpretations issued by the AASB comprise both AASB and UIG Interpretations.  UIG Interpretations were developed by the Urgent Issues Group, a former committee of the AASB.

This Standard also updates references in other Standards to the Conceptual Framework for Financial Reporting and the Framework for the Preparation and Presentation of Financial Statements to subsequent versions.

Need for a Service Standard

          Australian Interpretations

In the Australian context, Australian Interpretations do not have the same legal status as Standards (delegated legislation) and are treated as ‘external documents’ by the Acts Interpretation Act 1901 and the Legislation Act 2003.  Although references in one Standard to a second Standard are ambulatory (automatically moving forward to refer to the most recently-issued version of the second Standard), references in a Standard to external documents are stationary (being fixed in time to refer to the contents of the external document when the Standard was issued).  A simple reference to an Australian Interpretation in a Standard can refer only to the Interpretation that existed when the Standard was issued.  It cannot refer to any revised version of the Interpretation that may exist at a later reporting date.  However, a Standard can refer to a second Standard and, when the first Standard is applied at a later reporting date, the reference will be to the then-current version of the second Standard, even if it has been reissued since the first Standard was issued.

The service Standard approach, as applied to Australian Interpretations, involves issuing this Standard to list the versions of Australian Interpretations, and referring to this Standard in every other Standard where necessary to refer to an Interpretation.  This enables references to the Interpretations in all other Standards to be updated by reissuing the service Standard.

This approach preserves the status of Australian Interpretations as ‘external documents’ referred to in a Standard.  It does not treat the Interpretations as delegated legislation or confer ambulatory status on the reference.  In each Standard where there is a need to refer to an Australian Interpretation, the reference will be to this Standard, phrased as “Interpretation [number] [title] as identified in AASB 1048” (or similar).  This reference, being to another Standard, is ambulatory and will refer to the version of this Standard that is in force from time to time.  AASB 1048 itself will contain the direct references to the external documents and will be reissued periodically.

This approach to clarifying the status of Australian Interpretations ensures there is no difference between the status in the hierarchy accorded to Interpretations in IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors compared with AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors.

          Australian conceptual framework

In the Australian context, an Australian conceptual framework pronouncement, such as the Conceptual Framework for Financial Reporting and the Framework for the Preparation and Presentation of Financial Statements, also does not have the same legal status as a Standard (delegated legislation) and, like Interpretations, is treated as an ‘external document’ by the Acts Interpretation Act 1901 and the Legislation Act 2003. 

The service Standard approach, as applied to the Australian conceptual framework, involves issuing this Standard to update references to conceptual framework pronouncements in other Standards.  This approach preserves the status of such pronouncements as ‘external documents’ referred to in a Standard.  It does not treat the pronouncements as delegated legislation or confer ambulatory status on the reference.

There is no International Accounting Standards Board (IASB) Standard that directly corresponds to AASB 1048. However, Table 1 in AASB 1048 (see paragraph 6) contains a list of Australian Interpretations identifying the corresponding IASB Interpretations.

Tier 1

For-profit entities complying with the Australian Interpretations designated in this Standard as corresponding to the IASB Interpretations also comply with the Interpretations referred to by the IASB in its definition of International Financial Reporting Standards (IFRS Standards).

Not-for-profit entities’ compliance with IASB Interpretations will depend on whether any “Aus” paragraphs or Interpretations that specifically apply to not-for-profit entities provide additional guidance or contain applicable requirements that are inconsistent with IASB Interpretations.

Tier 2

Entities preparing general purpose financial statements under Australian Accounting Standards – Reduced Disclosure Requirements or Australian Accounting Standards – Simplified Disclosures (Tier 2) will not be in compliance with all IASB Interpretations.

AASB 1053 Application of Tiers of Australian Accounting Standards explains the two tiers of reporting requirements.

Conceptual frameworks

In relation to references to the Conceptual Framework for Financial Reporting and the Framework for the Preparation and Presentation of Financial Statements in other Standards, the approach taken in this Standard to clarifying the applicable framework pronouncement ensures there is no difference between the version of the conceptual framework referred to in IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors and in AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors, and in other Standards.

The Australian Accounting Standards Board makes Accounting Standard AASB 1048 Interpretation of Standards under section 334 of the Corporations Act 2001.

Keith Kendall

Chair – AASB

Dated 14 December 2020