Application of AASB 1 (AASB1053_06-10_COMPmay22_07-21)

Entities adopting Tier 2 reporting requirements for the first time that apply AASB 1 shall comply with the simplified disclosures under AASB 1060 paragraphs 206–213, including for the purposes of paragraphs 18A(a) and 18A(b).

When applying Tier 1 reporting requirements for the first time, an entity that prepared its most recent previous financial statements in the form of special purpose financial statements shall apply all the relevant requirements of AASB 1.

When applying Tier 2 reporting requirements for the first time, an entity that prepared its most recent previous financial statements in the form of special purpose financial statements:

(a) without applying, or only selectively applying, applicable recognition and measurement requirements of Australian Accounting Standards, including, if a parent entity, without presenting consolidated financial statements prepared in accordance with AASB 10 Consolidated Financial Statements (unless exempt), shall apply either:

(i) all the relevant requirements of AASB 1; or

(ii) Tier 2 reporting requirements directly using the requirements in AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors;

(b) without presenting consolidated financial statements, on the basis that neither the parent nor the group was a reporting entity (as defined in AASB 1057), shall apply either:

(i) all the relevant requirements of AASB 1; or

(ii) Tier 2 reporting requirements directly using the requirements in AASB 108; and

(c) applying all applicable recognition and measurement requirements of Australian Accounting Standards, including, if a parent entity, presenting consolidated financial statements prepared in accordance with AASB 10 (unless exempt), shall not apply AASB 1.

An entity applying paragraph 18A(c) continues applying the applicable recognition and measurement requirements of Australian Accounting Standards, whether it had previously initially applied recognition and measurement requirements consistent with AASB 1 or a predecessor to AASB 108, whichever was applicable at the time.

Entities that are applying AASB 1060 shall provide the disclosures required under AASB 1060 paragraphs 206–213 if they are applying paragraph 18A(a)(i) or 18A(b)(i), or the disclosures required under AASB 1060 paragraphs 106–110 if they are applying paragraphs 18A(a)(ii) or 18A(b)(ii), instead of the disclosures required under AASB 1 or AASB 108.

Paragraph 18A(a) addresses where an entity has not applied, or only selectively applied, applicable recognition and measurement requirements, rather than whether the entity had made an explicit and unreserved statement of compliance with such requirements. As such, if an entity becomes aware it had claimed compliance with applicable recognition and measurement requirements of Australian Accounting Standards in error in its most recent previous special purpose financial statements, the entity applies paragraph 18A(a).

Subject to paragraphs 19A and 21, an entity that:

(a) has applied Tier 1 reporting requirements or IFRSs in a previous reporting period; but

(b) whose most recent previous annual financial statements did not contain an explicit and unreserved statement of compliance with Tier 1 reporting requirements^[3] or IFRSs; and

(c) is resuming or commencing the application of Tier 1 reporting requirements;

shall apply all the relevant requirements of AASB 1, or the AASB 1 option for retrospective application of Australian Accounting Standards in accordance with AASB 108 as if the entity had never stopped applying Australian Accounting Standards or IFRSs.

An entity that is to claim IFRS compliance on resuming Tier 1 reporting requirements under paragraph 19, shall not use the AASB 1 option for retrospective application of Australian Accounting Standards in accordance with AASB 108 if it was not previously IFRS compliant.

Subject to paragraph 23, an entity that:

(a) has applied Tier 2 reporting requirements^[4] in a previous reporting period; but

(b) whose most recent previous annual financial statements did not contain an explicit and unreserved statement of compliance with Tier 2 reporting requirements^[5]; and

(c) is resuming the application of Tier 2 reporting requirements;

shall:

(d) apply all the relevant requirements of AASB 1, or the AASB 1 option for retrospective application of Australian Accounting Standards in accordance with AASB 108 as if the entity had never stopped applying Tier 2 reporting requirements, if the entity did not apply all applicable recognition and measurement requirements of Australian Accounting Standards; or

(e) not apply AASB 1, or the AASB 1 option for retrospective application of Australian Accounting Standards in accordance with AASB 108, if the entity applied all applicable recognition and measurement requirements of Australian Accounting Standards.

Entities described in paragraph 19B(a)-(c) resume the application of Tier 2 reporting requirements effectively using the same approach as an entity would for first transitioning from special purpose financial statements to Tier 2 reporting requirements set out in paragraph 18A. Accordingly, an entity that did not comply with Tier 2 reporting requirements due solely to omitting some disclosures, but otherwise continued to apply all applicable recognition and measurement requirements, is prohibited from applying AASB 1 on returning to Tier 2 requirements. Instead, it continues applying applicable recognition and measurement requirements, whether it had previously initially applied AASB 1 or a predecessor to AASB 108, whichever was applicable at the time. However, if such an entity did not continue to apply all applicable recognition and measurement requirements of Australian Accounting Standards in its most recent previous annual financial statements, that entity is required to apply AASB 1, or the AASB 1 option for retrospective application of Australian Accounting Standards in accordance with AASB 108, on resuming the application of Tier 2 reporting requirements.

A for-profit private sector entity that:

(a)    prepared its most recent previous annual financial statements in compliance with Tier 2 reporting requirements, including an explicit and unreserved statement of compliance with Tier 2 reporting requirements;

(b)    did not present consolidated financial statements, on the basis that neither the parent nor the group was a reporting entity (as defined in AASB 1057); and

(c)    is preparing consolidated financial statements for the first time in compliance with Tier 2 – Simplified Disclosures;

shall apply either: 

(d)    all the relevant requirements of AASB 1; or 

(e)    Tier 2 reporting requirements directly using the requirements in AASB 108.

An entity transitioning from Tier 2 to Tier 1 shall:

(a) apply AASB 1^[6], if it is claiming compliance with IFRSs; and

(b) not apply AASB 1, if it is a not-for-profit entity not claiming compliance with IFRSs.

In relation to paragraph 21(a), entities claiming compliance with IFRSs (which would include for-profit entities applying Tier 1 reporting requirements) need to apply the relevant requirements of AASB 1. This is because, in previously applying Tier 2 reporting requirements, these entities have applied only some of the disclosure requirements of AASB 1 or were prohibited or exempted from applying AASB 1.

An entity transitioning from Tier 1 to Tier 2 shall not apply AASB 1.

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