What Tier 2 reporters need to know about the AASB 1060 Exposure Draft
10/08/2026
The Australian Accounting Standards Board (AASB) has issued Exposure Draft ED 341, proposing amendments to AASB 1060 that would more closely align the presentation of Tier 2 financial statements with those in AASB 18.
The proposals are particularly relevant for entities preparing Tier 2 general purpose financial statements, including subsidiaries of Tier 1 groups. While the proposed mandatory effective date for the AASB 1060 amendments is still some time away, the changes may affect how Tier 2 entities present their primary financial statements and how they plan for transition.
Why this matters
AASB 18 introduces a more structured way of presenting financial statements for Tier 1 entities. The AASB is now proposing to update AASB 1060 so that Tier 2 entities follow similar classification and presentation principles, particularly in the primary financial statements.
This is a practical development for groups with both Tier 1 and Tier 2 reporters. It should help improve consistency across group reporting packs and financial statements, especially where a Tier 1 parent is preparing to apply AASB 18.
Timing and early adoption
The proposed effective date is the annual reporting periods beginning on or after 1 July 2030. For entities with a 30 June year end, this would generally mean the first affected annual financial statements would be for the year ending 30 June 2031. For entities with a 31 December year end, this would generally be the year ending 31 December 2031.
Early application is proposed to be permitted. This may be useful for Tier 2 subsidiaries that want to align their financial statement presentation with a Tier 1 parent applying AASB 18 earlier.
However, the amendments to AASB 1060 have not yet been finalised. This means Tier 2 entities cannot yet early adopt the proposed AASB 1060 changes. Groups considering early adoption should monitor the progress of the Exposure Draft and avoid assuming that Tier 2 subsidiaries can automatically follow the parent’s AASB 18 presentation before the amendments are issued.
What is proposed to change?
The main focus of the Exposure Draft is alignment of classification and presentation requirements. In plain terms, this means changes to how information is organised and presented in the primary financial statements, including the statement of profit or loss.
A key change is the proposed requirement to present income and expenses using defined categories — operating, investing, and financing. In simple terms, this is intended to make the statement of profit or loss easier to compare between entities by showing the results of day-to-day business activities separately from returns on investments and the cost of financing.
What should Tier 2 reporters do now?
Comments on the Exposure Draft are due to the AASB by 24 August 2026. Tier 2 entities that may be affected, particularly subsidiaries in Tier 1 groups, should consider whether they want to provide feedback or raise practical implementation concerns.
How SW can help
For some entities, implementation may simply involve remapping the chart of accounts and strengthening supporting documentation. For more complex entities, particularly those involved in investing or providing finance, implementation will require more careful analysis.
We can help Tier 1 and Tier 2 reporters prepare for AASB 18 and the proposed AASB 1060 amendments by providing practical support, including:
- assessing the potential impact of AASB 18 and the proposed AASB 1060 amendments on financial statements, reporting packs, and group reporting processes
- reviewing existing financial statement templates and identifying presentation changes that may be required
- mapping income and expense line items to the new operating, investing, and financing categories
- helping management identify available presentation choices and industry-specific considerations
- supporting Tier 1 groups to align reporting instructions and subsidiary reporting packs with AASB 18
- updating accounting policies, finance team guidance, and implementation plans so the transition is managed in a structured way.
If you would like to understand how the proposed changes may affect your organisation, please contact your SW advisor to discuss the practical implications and next steps.
Contributors
Jimmy Cao | Associate Director - IFRS Advisory, Assurance and Advisory Services
