• News
  • 6 May 2024

Welcome to Beyond The Numbers, our monthly newsletter which brings you a summary of the latest developments from local and international standard setters and regulators.

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In case you missed it

Senate Committee reports on Climate-related disclosures Bill

The Senate Economics Legislation Committee issued its report on the Federal Government’s Bill to mandate climate-related financial disclosures in an entity’s annual report.

The Bill will require large proprietary companies to determine and disclose the climate-related risks they face and other information relating to their greenhouse gas emissions by 1 July 2027, and contains other disclosure and audit requirements. The effective date of the proposals for larger companies is linked to the passage of the legislation but will be no earlier than 1 January 2025.

Despite numerous objections to certain provisions of the Bill, the Senate Committee majority recommended the Bill be passed. A dissenting report by the coalition Senators recommended that Group 3 entities and the reporting of Scope 3 emissions be excluded from the regime and proposed practical improvements to the audit provisions. The Bill is now subject to passage through the parliament.

Nexia’s explanation of the key elements of the Bill can be found here.

A copy of the Bill and related explanatory memorandum can be found here.

Read more >>


New tax disclosures in financial reports

The Treasury Laws Amendment (Making Multinationals Pay Their Fair Share – Integrity and Transparency) Act 2024 amends the Corporations Act 2001 to enhance transparency around tax residency of entities within a consolidated group.

The Act requires listed and unlisted Australian public companies that report under Chapter 2M of the Corporations Act to include a ‘Consolidated Entity Disclosure Statement’ describing several information for each entity that was part of the consolidated group at the end of the financial year. The required disclosures include – entity name, entity type, country of incorporation, percentage of share capital held, and tax residency.

The inclusion of a Consolidated Entity Disclosure Statement applies to those public companies for financial years commencing on or after 1 July 2023.

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AASB Board meeting – April 2024

The AASB met on 16 April 2024, at which it discussed the following topics:

  • Climate-related Financial Disclosure: The AASB set an aspirational deadline to finalise its Australian Sustainability Reporting Standards on climate-related financial disclosures by the end of August this year.
  • Post-implementation Review – Superannuation Entities: The AASB considered the draft Feedback Statement Post-implementation Review – AASB 1056 Superannuation Entities and Interpretation 1019 The Superannuation Contributions Surcharge and decided not to propose any changes to either AASB 1056 or Interpretation 1019.

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Queensland: Financial reporting requirements for government agencies

The Queensland Treasury has released its draft financial reporting guidelines for Queensland government agencies. These guidelines apply to periods beginning on or before 1 July 2023. The draft incorporates the effect of new standards issued during the year, as well as a separate sustainability section.

Queensland government agencies have until 13 May 2024, to provide feedback and comments on the draft.

Read more >>


Early ASIC guidance on the mandatory climate disclosure regime

Keynote speech by ASIC Chair Joe Longo at the Deakin Law School International Sustainability Reporting Forum explains ASIC’s approach to the supervision and enforcement of the forthcoming climate disclosure regime.

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IFRS 18 Presentation and Disclosure in Financial Statements

The International Accounting Standards Board (IASB) announced the release of IFRS 18 to replace IAS 1 Presentation of Financial Statements.

The main changes brought by IFRS 18 include:

  • Statement of profit or loss:
    (a) income and expenses to be classified into three defined categories mirroring the statement of cashflows – operating, investing, and financing; and
    (b) two new required subtotals – ‘operating profit’ and ‘profit before financing and income taxes’.
  • Notes to the financial statements: Enhanced transparency of company-specific performance measures (or ‘management-defined performance measures’) that are disclosed in the financial statements. Companies must explain why these alternative performance measures were used and its relationship to the related subtotals in the income statement; and
  • Both the primary financial statements and the notes: Enhanced requirements for aggregation and disaggregation of information.

IFRS 18 is effective for annual reporting periods beginning on or after 1 January 2027, with earlier application permitted. Educational materials on IFRS 18 can be found on the IFRS website.

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Post-implementation review of IFRS 15 Revenue from Contracts with Customers

At its March 2024 meeting, the IASB reviewed stakeholder feedback on the post-implementation review of IFRS 15 and tentatively decided to take no further action regarding:

  • Determining transaction price: variable consideration; sales-based taxes; non-cash consideration; and other aspects of determining the transaction price.
  • Timing of revenue recognition: criteria for recognising revenue over time; measurement of progress for performance obligations satisfied over time; and other aspects of determining when to recognise revenue.
  • Applying disclosure requirements.

The IASB will discuss the analysis of feedback on the other topics at future meetings.

Read more >>

 

Post-implementation Review of IFRS 9 — Impairment

On its March 2024 meeting, the IASB tentatively decided to take no further action on the following matters relating to measurement of estimated credit losses:

  • use of forward-looking scenarios;
  • use of post-model adjustments or management overlays; and
  • some application questions related to measuring ECL.

Read more >>

 

Clarifying investments in associates and joint ventures – Equity method

During March 2024, the IASB continued their discussions to clarify the equity method of accounting for investments in associates and joint ventures.

Since commencement of the project in 2020, the IASB has made a number of tentative decisions regarding, but not limited to:

  • Changes in an investor’s interest while retaining significant influence;
  • Recognition of losses of associates;
  • Transactions with (and between) equity accounted investments;
  • Contingent consideration; and
  • Impairment.

At its March meeting, the Board finalised its consideration of transition provisions relating to the proposed amendments to IAS 28 Investments in Associates and Joint Ventures.

The IASB agreed to finalise the drafting of an exposure draft of the amendments to IAS 28 with a 120-day comment period.

Read more >>

 

ISSB implementation insights podcast

The IFRS Transition Implementation Group (TIG) is a group that provides a public forum to discuss implementation questions on new or amended accounting standards. However, they don't issue authoritative interpretations of the standards.

In April 2024, TIG released their first podcast episode focused on applying IFRS S1 and IFRS S2 from the ISSB. The 16-minute podcast covers how to apply these standards together, common challenges companies face when implementing them, and best practices for effective use. You can find the podcast here.

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IASB concludes project on Business Combinations under Common Control

The IASB has published a project summary for its project on Business Combinations under Common Control (BCUCC). The project summary explains the reasons behind the IASB’s decision in November 2023 not to develop requirements for reporting BCUCCs.

The IASB acknowledged diversity in reporting on BCUCCs would continue and observed that investors said that they can work with this diversity. The information needed by investors varied among jurisdictions, making it difficult to develop requirements that would meet the information needs of users globally.

Furthermore, the IASB’s research suggested that any improvements to financial reporting that might result from developing requirements for reporting BCUCCs will probably be outweighed by the costs of developing and implementing such changes.

Read more >>


2024 Financial Reporting Update | Live webinar

Keep up to date with the latest local and international developments affecting financial reporting.

Nexia Australia invites you and your colleagues to attend our live webinar on 23 May at 11:00am AEST as our financial reporting specialists explore:

  • The key accounting standards and financial reporting changes for 30 June 2024;
  • How recent changes will affect the classification of loans with annual review clauses, covenants, and other conditions;
  • Legislative changes affecting companies, registered charities, and other For Purpose (Not-for-profit) entities;
  • How companies will be affected by the sustainability and climate-related disclosure projects; and
  • Developments in Australian and international financial reporting projects.

Register now and join our panel of experts as they discuss the latest financial reporting updates.

Learn more >>

 

2024 Budget – The future of Australian-made | Live webinar 

Treasurer Jim Chalmers will deliver the Federal Budget on Tuesday, 14 May and Nexia Australia is hosting an online briefing to provide:

  • Insights into what the Government seeks to incentivise businesses to invest
  • Key announcements affecting businesses, business owners, and high-net-worth individuals
  • The Government’s broader economic agenda

A panel of Nexia’s experts will join our lead host, National Tax Director David Montani, for a robust discussion on what’s in store for Budget 2024.

Dr Chalmers said that this year’s Budget will have “a very big focus on how we attract and deploy and absorb private sector investment”, foreshadowing possible incentives for businesses to invest in green energy and advanced manufacturing.

Register now and join our panel of experts as they discuss what the Budget means for you and/or your business.

Learn more >>


Reminder | Changes to self-assessment of tax exemption for Not-for-profits

Effective 1 July 2023, all non-charity not-for-profit entities holding an active ABN and claiming income tax exemption must annually self-declare their exempt status to the Australian Taxation Office (ATO). This requirement begins with the 2024 financial year return, due between 1 July and 31 October 2024.

Subsequent years will see pre-populated self-review returns, simplifying the process of confirming or updating information. Failure to comply could result in tax assessments and penalties.

The ATO underscores the importance of thorough assessments before claiming tax exemptions. Presuming exempt status without detailed analysis is not recommended, as the new reporting regime aims to ensure proper application of tax laws.

Read more >>


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