Submission to AASB Differential Reporting Framework

On 22 April 2010 the Australian Institute of Company Directors lodged a submission with the Australian Accounting Standards Board (AASB) relating to the AASB’s Exposure Draft 192 Differential Reporting Framework and the accompanying consultation paper Differential Financial Reporting – Reducing Disclosure Requirements.

The AASB proposes that a new differential reporting framework be adopted in Australia which would include a second tier of reporting requirements referred to as the Reduced Disclosure Regime (RDR). While the Australian Institute of Company Directors acknowledges that the RDR will reduce the burden for unlisted reporting entities when compared with the application of full international financial reporting standards (IFRS), we raised concerns that the RDR would be likely to increase the reporting burden for many entities including those currently preparing special purpose financial statements.

In summary the Australian Institute of Company Directors’ is of the view that:

• IFRS for SMEs should be adopted in Australia as soon as possible, as an option for unlisted reporting entities to use should they choose to do so;
• IFRS for SMEs should be available as an option rather than a mandatory standard;
• The reporting entity concept has been an important tool for alleviating the reporting burden for numerous entities and should be retained; and
• While financial reporting relief for many unlisted companies is long overdue, changes to Australia’s reporting entity framework which increase the burden on an undetermined number of entities should not be made until a full regulatory impact statement is undertaken.

Submission to AASB ED 192 Differential reporting framework