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AASB proposes interim change for special-purpose financial statements


Entities using special-purpose financial statements could soon be required to explicitly state if accounting policies comply with recognition and measurement requirements.

By Jotham Lian 11 minute read

The Australian Accounting Standards Board has issued an exposure draft proposing to require entities preparing special-purpose financial statements (SPFS) to make an explicit statement as to whether or not the accounting policies applied in the SPFS comply with all the recognition and measurement requirements in Australian Accounting Standards (AAS).

However, where an entity’s accounting policies do not comply with the recognition and measurement requirements in AAS, the AASB is not proposing and does not expect a quantification or reconciliation of the extent of non-compliance.

Entities will also need to disclose if it has subsidiaries, investments in associates or investments in joint ventures, and whether or not they have been consolidated or equity accounted in a manner consistent with the requirements set out in AAS.


The proposal comes as the AASB expresses concern that the quality of disclosures in a significant number of SPFS is not sufficient to enable a user to determine what additional information they might need.

It is, however, an interim measure as the AASB looks towards its longer-term project of effectively removing the option to prepare special-purpose financial statements, with the AASB proposing two general purpose financial statement Tier 2 alternatives.

“While the AASB is currently undertaking a broader project which proposes to address the problems of SPFS by removing the ability for certain entities to prepare SPFS when they are required to comply with AAS and replace them with GPFS — initially for for-profit entities and, in due course, not-for-profit entities — this project will take some time,” the AASB said.

“Further, understanding the alignment between an entity’s accounting policies and the R&M requirements in AAS would help entities assess the impact of any future transition from SPFS to GPFS.”

The interim proposal is proposed to be applicable to annual periods ending on or after 30 June 2020.

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Jotham Lian

Jotham Lian


Jotham Lian is the editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.

Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.

You can email Jotham at: This email address is being protected from spambots. You need JavaScript enabled to view it. 

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