Disclosure of the effect of new IFRS standards not yet issued in Australia

Paragraph 30 of AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors requires entities preparing full general purpose (Tier 1) financial statements to disclose the possible impact of Australian Accounting Standards issued but not yet effective, on future financial statements (i.e. in the year of initial application).

When new or amending accounting standards are issued by the International Accounting Standards Board (IASB), these can take some time to be approved and issued by the Australian Accounting Standards Board (AASB) as equivalent Australian Accounting Standards.

In order for these Tier 1 financial statements to include an explicit and unreserved statement of compliance with IFRS, disclosure is also required about the potential effect of IFRS standards issued by the IASB at the time the financial statements are authorised for issue, which will be issued by the AASB as Australian Accounting Standards in future.

The AASB therefore recently issued AASB 2019-5 Amendments to Australian Accounting Standards - Disclosure of Effect of New IFRS Standards Not yet Issued in Australia. AASB 2019-5 adds paragraph 17 to AASB 1054 Australian Additional Disclosures and clarifies that, in complying with paragraph 30 of AASB 108, entities intending to assert compliance with IFRS must also disclose the potential effect of IFRS standards that are yet to be issued by the AASB.

The changes also apply to entities preparing special purpose financial statements under Part 2M of the Corporations Act 2001 or the ACNC Act because those standards require compliance with AASB 108, paragraph 30, though such entities are unlikely to assert compliance with IFRS.

These changes are effective for annual periods beginning on or after 1 January 2020.