With the Australian Accounting Standards Board advising Special Purpose Financial Statements will no longer be allowed for certain for-profit private sector entities, it is time to start considering the impact of changing to General Purpose Financial Statements and potentially implementing the change for the financial year ended 30 June 2021.

Impacts for-profit private sector entities

The changes only apply to for-profit private sector entities that:

  • are required by legislation to prepare financial statements that comply with either Australian Accounting Standards (AAS) or ‘Accounting Standards’ or
  • their constituting document or any other document requires them to prepare financial statements that comply with AAS provided the relevant document was created or amended on or after 1 July 2021.

The change will apply to the following for-profit private sector entities including:

  • Unlisted public companies;
  • Large proprietary companies;
  • Foreign controlled small proprietary companies;
  • Crowd-sourced funding small proprietary companies;
  • Financial services licensees.

Not-for-profit entities (private and public sector) and for-profit public sector entities can continue to prepare SPFS.

There will significant benefits for companies to transition to GPFS for the financial years beginning before 1 July 2021 including;

  • No longer needing to restate comparative information for adjustments made because of recognition and measurement differences; and
  • No longer needing to disclose information required for Tier 2 disclosures in the comparative period, if that information was not required or disclosed in the previous SPFS.

Impacts not-for-profit sector entities and public sector entities

To better align the Tier 2 disclosure requirements to the international standard, the Australian Accounting Standards Board introduces from July 1 2021 a new simplified disclosure standard to replace the previous Tier 2 reduced disclosure requirements (RDR). This applies to:

  • For-profit entities that do not have public accountability (large proprietary companies).
  • Not-for-profit private sector reporting entities.
  • Public sector reporting entities other than the Australian Government, State, Territory and Local Governments.

It is important to be prepared for these reporting changes. Clients should consider transitioning early to utilise the incentives and reduce the accounting burden in the 2022 financial year.

Out team has extensive experience in the preparation of GPFS. We can provide you with the right advice to help your business transition as smoothly as possible through the changing financial environment.

Download AASB Fact Sheet
Key Contact
John Christopoulos
John Christopoulos

Director Business Services