Transitional relief now available for NFPs moving from RDR to Simplified Disclosures

The requirement to move to Simplified Disclosures for years ending 30 June 2022 does not apply to not-for-profit entities (NFPs) because the Australian Accounting Standards Board (AASB) currently has a separate project under way to revisit the financial reporting framework for NFPs.

Consequently, there is a lack of urgency for these entities to change to Simplified Disclosures unless they are currently preparing Tier 2 general purpose financial statements (Reduced Disclosures). This is because Reduced Disclosures as a financial reporting option will be withdrawn once Simplified Disclosures becomes effective from 1 July 2021.

While there are incentives for for-profit entities to transition to Simplified Disclosures early, including not having to provide comparative information for new disclosures, no such allowance was originally made for NFPs wishing to transition from Reduced Disclosures to Simplified Disclosures before 1 July 2021.

Changes now provide relief

Recently published AASB 2021-1 Amendments to Australian Accounting Standards – Transition to Tier 2: Simplified Disclosures for Not-for-Profit Entities now contains amended transitional requirements so that NFPs will get optional relief from presenting comparative information in the notes if they did not previously disclose the comparable information in their most recent previous financial statements (i.e. comparative information for new disclosures).

This optional relief, contained in AASB 1060, paragraph B1(c), is only available to NFPs applying Simplified Disclosures early, i.e. for financial years starting before 1 July 2021 (i.e. 30 June 2021 and 31 December 2020 year-ends). NFPs moving to Simplified Disclosures ‘on time’ for 30 June 2022 onwards are required to provide comparative information for new disclosures.

No relief from restating comparatives or distinguishing errors from changes in accounting policies

It is important to note that the following other transitional exemptions (optional relief) available to for-profit entities cannot be used by NFPs adopting Simplified Disclosures for the first time:

Optional relief

Available on first time adoption

Relief from restating comparatives

Before 1 July 2021

Relief from distinguishing errors from changes in accounting policies

Before 1 July 2022

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