Are you ready for 30 April 2017 reporting? - KPMG | US Accounting Standards (AASB 1057) AASB 2014-9:...

Are you ready for June 2017 reporting?27 April 2017

2

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Your facilitators are...Kim Heng

Ben Seumahu

Carolyn Ralph

Julie Locke

3





What is our reporting context?

• Tax legislation impacting financial reporting

• New audit reports

• Enhanced audit reports for listed entities

• Surveillance program

• Impairment

• Remaking of class orders

• Time to consider transition for

• AASB 9 Financial instruments

• AASB 15 Revenue

• Not-for-profit sector reporting

AASB ASIC

ATOAUASB

Agenda

• What’s new for 30 June 2017?

• Regulatory update

• What’s next?

• Wrap up

Agenda

• What’s new for 30 June 2017?

‒ Standards effective for the first time

‒ Enhanced auditor reporting

Standards effective for the first time

7





What standards are mandatory for the 1st time for June 2017 reporting ?

Year ends

AASB 2014-3:

Accounting for

Acquisitions of

Interests in Joint

Operations

AASB 14 Regulatory

Deferral Accounts &

AASB 2014-1 (Part D):

Amendment to

AASB 14

AASB 2015-5:

Investment entities:

Applying the

Consolidation

Exception

AASB 2014-4:

Clarification of

Acceptable Methods of

Depreciation and

Amortisation

Application of

Australian Accounting

Standards

(AASB 1057)

AASB 2014-9: Equity

method in Separate

Financial Statements

AASB 2014-6:

Agriculture: Bearer

Plants (AASB 116 &

AASB 141)

Annual Improvements

(2012 – 2014)

AASB 2015-2:

Disclosure Initiative

(AASB 101)

AASB 2015-6:

Extending Related

Party Disclosures to

Not-for-Profit Public

Sector Entities

Superannuation

Entities (AASB 1056)

AASB 2015-7: Fair

Value Disclosures of

Not-for-Profit Public

Sector Entities

AASB 2016 – 4:

Removal of DRC as a

value in use measure

AASB 112: Income

Taxes: Recognition of

Deferred Tax Assets

for Unrealised Losses

AASB 107: Statement

of Cashflows:


Year ends and

Half-YearsHalf-Years

Amendments to

Australian Accounting

Standards – Further

Annual Improvements

2014-2016 Cycle

8





AASB Disclosure Initiative: Amendments to AASB 101‒ Applies to reporting periods beginning on

or after 1 January 2016. Earlier

application is permitted

‒ Removed reference to a ‘summary of

significant accounting polices’

‒ Removes minimum disclosure

requirements such as line items to be

presented in statement of financial

position

‒ Encourages companies to no longer

disclose information that is not material

‒ Provides alternative examples of how

notes to financial statements should be

grouped - giving prominence to areas

most relevant to understanding the

organisation

…With the issue of these

amendments and given the

supportive statements from the

corporate regulator, the Australian

Securities and Investment

Commission, this is an opportune

time for directors and CFOs to take

action to address disclosure

overload in their financial

statements…

Kris Peach

AASB Chair

AASB Media Release – 2 Feb 2015

“

9





Annual Improvements amendments: 2012-14Do any of the forthcoming annual improvements impact you?

Hold non-current assets held for sale or distribution? (AASB 5)

Service a debtor that has been derecognised from your balance

sheet? (AASB 7)

Have employees in different countries in Europe? (AASB 119)

Have financial assets and liabilities subject to offsetting

arrangements? (AASB 132)

Refer to information outside the financial statements in your interim

accounts? (AASB 134)

10





Consolidation suite of amendmentsWho do the consolidated suite amendments impact?

AASB 10, 12, 128 – Investment

entities applying the consolidation

exceptions

AASB 127 – Equity method in

separate financial statements

Managed funds

AASB 11 – Accounting for

acquisitions of interest in a joint

operation that constitutes a

business

Countries that do not permit

investments in associates to be

carried at cost

Entities where operations are

undertaken through unincorporated

joint arrangements

11





Other standards effective for June 2017 Y/Es

AASB 2014-4: Clarification

of Acceptable Methods of

Depreciation and

Amortisation

Rebuttable presumption that use of revenue-based amortisation

methods for intangible assets is inappropriate.

Clarifies revenue-based depreciation for property, plant and

equipment cannot be used.

AASB 2014-6: Agriculture:

Bearer Plants (AASB 116 &

AASB 141)

Bearer plants now in scope of AASB 116 Property, Plant &

Equipment for measurement and disclosure purposes.

Produce growing on bearer plants will continue to be measured

at fair value less costs to sell under AASB 141 Agriculture.

12





Australian specific standards effective for June 2017 Y/E and H/Ys

Superannuation Entities

(AASB 1056)

Replaces AAS 25 Financial Reporting by Superannuation Plans

and applies to large superannuation entities regulated by the

Australian Prudential Regulation Authority (APRA) and to public

sector superannuation entities.

AASB 2015-6: Extending

Related Party Disclosures

to Not-for-Profit Public

Sector Entities

Extends the scope of AASB 124 Related Party Disclosures to

include not-for-profit public sector entities.

AASB 2015-7: Fair Value

Disclosures of Not-for-

Profit Public Sector

Entities

Provides relief to not-for-profit public sector entities from certain

disclosures about fair value measurement of property, plant and

equipment held for current service potential rather than to

generate net cash inflows.

13





Standards effective for June 2017 HYs only

Annual reporting periods beginning on or after 1 January 2017

AASB 112: Income


unrealised losses

Clarifies that existence of a deductible temporary differences

is not affected by possible future changes in the carrying

amount or expected manner of recovery of the asset and

provides guidance on determine future taxable profit.

AASB 107: Statement of

Cashflows: Disclosure

Initiative

Additional disclosures required to evaluate changes in

liabilities arising from financing activities.

AASB 2016 – 4: Removal

of DRC as a value in use

measure

Removes the exemption that existed for to apply depreciated

replacement costs as measure of value in use.

Further Annual

Improvements 2014-2016

Cycle

Clarifies scope of AASB 12 by specifying requirements apply

to any interests in other entities that are classified as held for

sale and discontinued operations.

Enhanced audit reporting

15





Modernising audit reports

• Opinion

• Going concern

Prominence

• Link to AUASB for homogenous wording

Innovation• Key Audit

Matters

• Other Information

Value

NO CHANGE: Forming a view on truth and fairness of financial report

All audit reports are changing

16





Value: adding confidenceKey Audit

Matters… have the

capacity to add real

insights for

shareholders in

understanding the

audit, audit quality,

and the confidence

they have in the

market

Key audit matters:

those matters that in

the auditor’s

professional

judgement were of

most significance in

the audit of the

financial report…

those matters that

required significant

auditor attention in

performing the audit

Making the previously

unobservable

……observable

17





KAMs: impact for preparersAlignment between preparers and auditors on what is important

when addressing the truth and fairness of the financial report

Pre

pare

rsA

udito

rsCritical

judgements

Skill &

competence

Trading &

performance

impact KAMs

18





Increased audit attention due to...

Systems &

processes

Risk of error

This is a key audit matter due to…

• the importance of the (sales)

activity to the financial position

and performance

• the multiple systems, each with

specific platforms and interfaces

to the accounting reporting

systems, recording the (sales)

activity. The Company apply

different controls and manual

overlays to each of these systems

when preparing the financials.

• Historical issues with accurate

recording and reporting from

these systems

These conditions are prone to error,

increase auditor effort applied,

including involving an IT Specialist.

Distance

Complexity

Controls

Manual

Time

Specialist


unobservable

……observable

19





Increased audit attention due to...

This is a key audit matter due to the

significant judgement applied by the

Company to $X valuation, which is

modelled using future oriented data for

Y. This impacts the audit due to:

• the potential for bias and inconsistent

application to $X versus other

financial amounts

• the nature of judgements used can

have a wide range of outcomes

• history being an inaccurate predictor

of the future for Y, particularly given

the [acquisition of Z/volatile recent

market conditions which are

expected to continue into the future]

These conditions necessitate additional

scrutiny by us to assess the objectivity of

sources used for judgements and their

consistent and reasonable application.

Complexity

History

Authoritative

sources

Scrutiny

ConsistencyOutcome

range

Bias


unobservable

……observable

Judgement

20





Value: sharing the bigger picture

Annual

Report

Financial

Report

Auditor’s

Report

Directors

Report

Chairman’s

Address

List of

share

holders

Review of

Operations

Sustainability

Report

Corporate

Governance

Statement

Health &

Safety

Report

Etc. etc.

etc.

Other

Information…

ASA 720

Auditor’s

responsibilities in

relating to Other

Information in

documents

containing an

audited financial

report

Other

Information:

To identify material

inconsistencies

with financial

report, other

information, and

auditors

understanding…

the auditor reads,

responds, reports

21





What do we ‘report’?

All Other Info

received


unobservable

……observable

Some Other

Info received

22





Audit report – Other Information section

Making the previously unobservable ……observable

Agenda

• Regulatory update

‒ ASIC focus areas

‒ Class orders changes

‒ Tax transparency & tax rate changes

ASIC focus areas

25





ASIC focus areasEstimates

‒ Impairment testing

‒ Valuation of and disclosure of financial

instruments

Accounting policies

‒ Assessment of off balance sheet treatments

(joint arrangements, structured entities)

‒ Revenue recognition and expense deferral

‒ Tax-effect accounting

Key disclosures

‒ Accounting policy choice selection

‒ Sources of estimation and judgement

‒ Impact of new financial instruments, revenue

and leases standards

26





ASIC financial statement surveillance

Reasonableness of cashflows and assumptions

Cashflows matched to carrying values of all assets that

generate cashflows

Cash Generating Units (CGUs) are not identified at too

high level

Corporate costs and assets are allocated to CGUs on an

appropriate basis

Impairment/

Asset values

Class order changes

28





Commonly used remade class orders

Class Order Replacement instrument

ASIC CO 98/100 Rounding in financial

and directors’ reports

Rounding in Directors’/ financial

reports Instrument 2016/191

ASIC CO 98/1418 Wholly-owned

entities (Deed of Cross Guarantee)

Directors’ report relief Instrument

2016/188

ASIC CO 98/2395 Transfer of

information from the directors’ report

Audit relief Instrument 2016/284

Wholly owned companies

Instrument 2016/285

ASIC CO 98/1417 Audit relief for

proprietary companies

Entities to ensure references to the relevant instrument are updated as appropriate in any

financial reports or directors’ resolutions

KPMG guidance

16RU-002

16RU-005

16RU-008

16RU-008

Tax transparency & tax rate changes

30





Tax transparency- General purpose financial statements

Further clarification from ATO on implementation expected

Decem

ber

201

5 The Tax Laws Amendment (Combating Multinational Tax Avoidance) Act 2015 enacted A

ugust

2016 ATO released a

consultation paper seeking to provide more guidance on the new requirement M

arc

h 2

01

7 Treasury Laws Amendment (Combating Multinational Tax Avoidance) Bill passed that GPFS are to be lodged in ‘the approved form’ with the ATO

April/M

ay 2

017 ATO expected

to provide final guidance and clarification as a result of submissions on consultation paper

31





Tax transparency: GPFS – what we can confirm

Tax Law Amendments –

General purpose financial

statements (GPFS)

Tier 1 or Tier 2 depending on

whether publicly accountable

Need to comply where meet the

criteria even if don’t currently lodge with

ASIC

Single entity or consolidated financial statements (needs to

include taxpayer)

Not required to be AASBs

‘Commercially accepted principles

relating to accounting’ e.g. USGAAP or IFRS

as adopted by EU

32





Tax transparency: GPFS – practical example

Augmented Reality Inc

(Registered foreign company)

Augmented Reality Pty Ltd

(Large proprietary company)

Australia

US GAAP

Lodges with SEC

Lodges special purpose financial

statements

Is Augmented Reality Pty

Ltd required to lodge

GPFS with ATO?

a corporate tax entity

a significant global

entity

an Australian resident

does not lodge GPFS

with ASIC

and is required to

lodge a tax return

33





Tax transparency: GPFS – practical example

Single entity financial

statements

Prepared using AASBs

Additional cost to prepare as

only prepare special purpose

financial statements for

Corporations Act purposes

Consolidated financial

statements (consisting of tax

payer and some/all members of

group)

Prepared using ‘commercially

accepted principles relating to

accounting’ such as USGAAP

Already prepared for lodgement

with SEC (and possibly already

lodged with ASIC by

Augmented Reality Inc) – no

additional cost to prepare

Augmented Reality Pty Ltd

individual general purpose

financial statements

Augmented Reality Inc’s

consolidated US GAAP financial

statementsOR

Under clarification expected to be confirmed by the ATO, Augmented

Reality Pty Ltd can lodge:

Single entity or consolidated financial statements (needs to

include taxpayer)

Not required to be AASBs

‘Commercially accepted principles

relating to accounting’ e.g. USGAAP or IFRS

as adopted by EU

34





Tax rate changes

2016-17

• Aggregated turnover < $10m

2017-18


2018-19


Financial

statements

impacts

Current

year tax

rate

Deferred

tax

balances

Franking

credits

Reduction in tax rate to 27.5% for small business entities

Agenda

• What’s coming up?

‒ Standards available for early adoption

‒ Looking ahead

Standards available for early adoption

37





Standards available for early adoption for June 2017 Y/Es

AASB 9

Financial Instruments

AASB 15*

Revenue from

Contracts with

Customers

AASB 2014-10: Sale or

Contribution of Assets

between an Investor

and its Associate or

Joint Venture

Beginning on or after 1 January 2018

AASB 2016 – 4:

Removal of DRC as a

value in use measure


AASB 16

Leases


AASB 112: Income


Deferred Tax Assets

for Unrealised Losses

AASB 107: Statement

of Cashflows:


Classification and

Measurement of

Share-based Payment

Transactions:

Amendments to

AASB 2

AASB 1058

Income of NFPs

IFRIC 22

Foreign Currency Transactions and

Advance Consideration

Transfers of Investment Property, Annual

Improvements 2014-2016 Cycle and Other

Amendments*

* For NFPs, AASB 15 & Transfer of investment

property/improvements is deferred to years beginning

1 January 2019

38





Revenue recognition – Is the top-line changing under AASB 15?

Key publications:

‒ Issues In-Depth

‒ Revenue for sectors – construction,

consumer goods, housebuilders, insurance,

oil and gas, power and utilities,

telecommunications, transport

‒ First Impressions

‒ Revenue Transition Options

‒ IFRS 15 Illustrative Disclosures

Resources available at:

‒ KPMG’s Global IFRS Institute

Webinar recording available at:

‒ KPMG’s Australia website

Any specific question or other assistance:

‒ Reach out to your KPMG contact

Headline changesControl replaces risks

and rewards

New guidance on identifying

performance obligations

New over time

criteria

https://home.kpmg.com/xx/en/home/services/audit/international-financial-reporting-standards/revenue.html

https://home.kpmg.com/au/en/home/insights/2015/09/implementing-revenue-standard-aasb15-15-sep-2015.html

39





Financial instruments – more or less volatility in the P&L?

Key publications:


‒ IFRS 9 for corporations – what’s the impact

on your business

‒ IFRS 9 for banks – what’s the impact on your

business

‒ Guide to annual financial statements – IFRS

9 – Illustrative disclosures for banks







Headline changesMove to an “expected

loss” impairment model

More financial assets

measured at FVTP&L

Greater flexibility in

hedge accounting



40





Leases – A more transparent balance sheet under AASB 16

Key publications:

‒ SlideShare presentation

‒ KPMG Webinar

‒ Web article


‒ Transition options







Headline changesAll leases on balance

sheet

Front loading of lease

expense

Focus on definition of

lease



41





Disclosures in comparative periodsTime is of the essence

41

“It is reasonable for the market to expect that

quantitative information will be available and

disclosed for the reporting date that coincides with

the start of the first comparative period that will be

affected in a future financial report. Information that

there will be no material impact may also be important

information for the market”

ASIC Media Release (16-442MR)

42





Disclosures in comparative periodsConsider…

Description and explanation of the key concepts in the relevant standard

Timeline for implementation

What is the impact going to be on key performance metrics?

Quantitative information about possible impacts (if available)

Additional qualitative information (if quantitative information is not available)

May be relevant to disclose that impact is not expected to be material

Looking ahead

44





Looking ahead – IASB & IFRIC projects

‒ Narrow changes to AASB 112,123 and AASB 9Annual

Improvements

cycle 2015-2017

‒ Board completed deliberations in February 2016

‒ Standard expected early 2017

Insurance

Contracts

‒ Fatal flaw issued in February 2017

‒ Standard expected to be issued May 2017

Service

concessions:

grantor

accounting

45





Looking ahead – IASB & IFRIC projects

‒ ED issued in May 2015

‒ Comment period ended 25 November 2015

‒ Revised framework expected in 2017

Conceptual

Framework

‒ Provides guidance when there is uncertainty over income

tax treatments

‒ Interpretation expected in 2017

Uncertainty over Income Tax Treatments

(Interpretation )

‒ Board completed deliberations in February 2016

‒ Standard expected in 2017

Classification of

(Amendments to

IAS 1)

Agenda

• Wrap up

47





Take-aways

Prepare for changes that impact you at June 2017

Be aware of ASIC focus areas and watch out for ATO clarified

guidance on lodgement of GPFS with the ATO

Engage early with your auditors about the enhanced audit report

Consider how you will transition to new financial instruments,

revenue standards and leases standards, including what your

disclosures in the lead up to the effective date will say

Questions

Appendix

• Standards effective for June 2017

• Key Audit Matters – Trends & issues

• Standards available for early adoption

50





Standards effective – June 2017 June Y/Es

Year end and half-years

AASB 2015-2:


(Amendments to

AASB 101)

The amendments do not require any significant change to current practice, but

should facilitate improved reporting, including and emphasis on only including

material disclosures, clarity on the aggregation and disaggregation of line items,

the presentation of subtotals, the ordering of notes and the identification of

significant accounting policies.

AASB 2015-5:

Investment entities:

Applying the

Consolidation

Exception

Under the amendments:

‒ An investment entity parent is required to fair value a subsidiary providing

investment-related services that is itself and investment entity;

‒ An immediate parent owned by an investment entity group is exempt from

preparing consolidated financial statements; and

‒ When a non-investment entity investor applies the equity method, it is permitted

to retain the fair value accounting applied by its investment entity associate or

joint venture.

AASB 2014-1 (Part D):

Amendment to

Regulatory Deferral

Accounts (AASB 14)

Interim guidance permitting first-time adopters of IFRS to continue using previous

GAAP to account for regulatory deferral account balances while the IASB

completes its comprehensive project in this area.

51





Standards effective – June 2017 June Y/Es


AASB 2014-4: Clarification

of Acceptable Methods of

Depreciation and

Amortisation

Introduces a rebuttable presumption that the use of revenue-based amortisation

methods for intangible assets is inappropriate. Limited opportunity for

presumption to be overcome.

Clarifies that revenue-based depreciation for property, plant and equipment

cannot be used.

AASB 2014-6: Agriculture:

Bearer Plants (AASB 116 &

AASB 141)

Bearer plants are now in scope of AASB 116 Property, Plant & Equipment for

measurement and disclosure purposes. Therefore, a company can elect to

measure bearer plants at cost. However, the produce growing on bearer plants

will continue to be measured at fair value less costs to sell under AASB 141

Agriculture.

AASB 2014-9: Equity

method in Separate

Financial Statements

Allows the use of the equity method in separate financial statements in the

accounting for associates, joint ventures and subsidiaries.

AASB 2014-3: Accounting

for Acquisitions of

Interests in Joint

Operations

Business combination accounting required to be applied to acquisitions of

interests in a joint operation that meets the definition of a ‘business’ under AASB 3

Business Combinations.

52





Standards effective – June 2017June Y/Es


Annual Improvements

(2012 – 2014)

Amendments to existing accounting standards, particularly in relation to:

‒ AASB 5 – guidance on changes in method of disposal;

‒ AASB 7 – clarifies ‘continuing involvement’ for servicing contracts;

‒ AASB 7 – clarifies offsetting disclosures are not specifically required in interim

financial statements, but may be included under the general requirements of

AASB 134;

‒ AASB 119 – clarifies that discount rates used should be in the same currency as

the benefits are to be paid; and

‒ AASB 134 – clarifies that disclosures may be incorporated in the interim financial

statements by cross-reference to another part of the interim financial report.

Application of Australian

Accounting Standards

(AASB 1057)

Majority of AASB standards and interpretations have been reissued for editorial

changes. However, there is no technical application impact from reissue of

standards and interpretations. A new standard, AASB 1057 has been issued as

part of the reorganisation process.

53





Standards effective – June 2017June Y/Es and HYs

Half-years only

Superannuation Entities

(AASB 1056)

A new Australian specific Standard for superannuation entities that will replace

AAS 25 Financial Reporting by Superannuation Plans. The standard applies to

large superannuation entities regulated by the Australian Prudential Regulation

Authority (APRA) and to public sector superannuation entities. It does not apply to

self-managed superannuation funds or small APRA funds.

AASB 2015-6: Extending

Related Party Disclosures

to Not-for-Profit Public

Sector Entities

Extends the scope of AASB 124 Related Party Disclosures to include not-for-profit

public sector entities.

AASB 2015-7: Fair Value

Disclosures of Not-for-

Profit Public Sector

Entities

Amends AASB 13 Fair Value Measurement to provide relief to not-for-profit public

sector entities from certain disclosures about fair value measurement of property,

plant and equipment held for current service potential rather than to generate net

cash inflows.

54





Standards effective for June 2017 HYs only


AASB 112: Income

Taxes: Recognition and

Measurement

Amendments clarify that the existence of a deductible temporary differences

depends solely on a comparison of the carrying amount of an asset and its tax

base at the end of the reporting period, and is not affected by possible future

changes in the carrying amount or expected manner of recovery of the asset.

Guidance on how to determine future taxable profit for the recognition test is

also provided.

AASB 107: Statement of

Cashflows: Disclosure

Initiative

Amendments require additional disclosures to evaluate changes in liabilities

arising from financing activities, including both changes arising from cash flows

and non-cash changes (such as effects of changes in foreign exchange rates

and changes in fair values).

AASB 2016 – 4: Removal

of DRC as a value in use

measure

For Not-for profits the amendment removes the exemption that existed to apply

depreciated replacement costs as measure of value in use. The removal of

DRC as measure of recoverable amount will result in more focus on the fair

value measurements requirements of AASB 13.

Further Annual

Improvements 2014-2016

Cycle

Amendment clarifies the scope of AASB 12 by specifying that the disclosure

requirements apply to an entity’s interests in other entities that are classified as

held for sale, held for distribution to owners in their capacity as owners or

discontinued operations in accordance with AASB 5 Non-current Assets Held

for Sale and Discontinued Operations.

55





Enhanced audit reportingIncreased audit attention due to.....example 3

New standards

History

Experience Risk interpretation

differences

Risk of error

This is a key audit matter due to…

• the first time application of X

accounting standard, made

more complex due to the lack

of institutional knowledge and

experience of the Company

• the (potential) significant

financial impact of the changes

to the Company results

• the unsophisticated recording

systems & processes recently

implemented by the Company

These conditions increased the

auditor effort applied.


unobservable

……observable

56





Enhanced audit reporting KAMs: Trends to date

https://home.kpmg.com/au/en/home/insights/2017/03/

key-audit-matters-auditor-report-28-march-2017.html

https://home.kpmg.com/au/en/home/insights/2017/03/key-audit-matters-auditor-report-28-march-2017.html

57





Enhanced audit reporting: KAMs: top 4

KAMs

58





Enhanced audit reporting: KAMs

59






Annual periods beginning on or after 1 January 2018

Financial Instruments

(AASB 9)

The AASB has issued the complete AASB 9. The new standard includes revised

guidance on the classification and measurement of financial assets, including a new

expected credit loss model for calculating impairment, and supplements the new general

hedge accounting requirements previously published. It supersedes AASB 9 (issued in

December 2009 – as amended) and AASB 9 (issued in December 2010).

Revenue from

Contracts with

Customer (AASB 15)*

This standard contains a single model that applies to contracts with customers and two

approaches to recognising revenue: at a point in time or over time. The model features a

contract-based five-step analysis of transactions to determine whether, how much and

when revenue is recognised.

*The original date for the amendment was deferred to 1 January 2018

AASB 2014-10: Sale or

Contribution of Assets

between an Investor

and its Associate or

Joint Venture*

The amendments require the full gain or loss to be recognised when the assets

transferred meet the definition of a ‘business’ under AASB 3 Business Combinations

(whether housed in a subsidiary or not).

60






Annual periods beginning on or after 1 January 2018

Transfer of Investment

Property

Amendments to IAS 40

Provides guidance on transfers to, or from, investment properties.

Classification and

Measurement of

Share-based Payment

Transactions:

Amendments to AASB 2

Introduces new requirements for accounting for the effects of vesting and non-vesting

conditions on cash-settled share-based payments, share-based payment transactions

with a net settlement feature for withholding tax obligations; and modifications that

change classification of SBPs from cash-settled to equity-settled..

Foreign Currency Transactions and

Advance Consideration

IFRIC Interpretation 22

Provides guidance about the exchange rate to be used in reporting foreign currency

transactions when advances are made.

61







Income of NFP entities

(AASB 1058 & AASB 15

NFP Implementation

guidance)

‒ This Standard and guidance changes the income recognition requirements that

apply to not-for-profit (NFP) entities, and requires an arrangement entered into

by a NFP to be enforceable and sufficiently specific to be considered within the

scope of AASB 15. The Standard replaces the income recognition requirements

relating to private sector NFP entities, previously in AASB 1004 Contributions

and the majority of existing requirements for income recognition relating to

public sector NFP entities.

Leases (AASB 16)

‒ AASB 16 removes the classification of leases as either operating leases or

finance leases – for the lessee – effectively treating all leases as finance leases.

‒ Short-term leases (less than 12 months) and leases of low-value assets (such as

personal computers) are exempt from the lease accounting requirements.

‒ There are also changes in accounting over the life of the lease. In particular,

companies will now recognise a front-loaded pattern of expense for most leases,

even when they pay constant annual rentals.

‒ Lessor accounting remains similar to current practice – i.e. lessors continue to

classify leases as finance and operating leases.


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