AASB 18 Presentation and Disclosure in Financial Statements has been introduced to enhance the presentation of financial statement as well as for transparency and comparability in reporting a company’s operating results.

This new standard will significantly impact financial reporting for listed companies and other Tier 1 reporters. However, AASB 18 also provides management an opportunity to more closely align how they measure, and view performance compared to how is presented on the face of the statement of profit or loss. 

Why the changes?

Users of financial statements, especially investors, have raised concerns about the usefulness and comparability of  information from financial statements.

Some common issues impacting the quality of information in financial reporting include:  

• lack of clear definitions or guidance on how entities present their operating performance under previous standards
• divergence in practice regarding communication of alternative performance measures, commonly known as Non-IFRS measures or adjusted earnings
• material items being labelled as “other” in financial statements.
• AASB 18 was introduced to provide additional transparency and comparability for users of financial statements.

What are the changes?

There are three major changes under the new requirements:

1. New structure for presentation of profit or loss

The standard mandates that the profit or loss statement be structured into three categories:

• operating
• investing and
• financing.

It also introduces two new required subtotals:

• operating profit and
• profit before financing and income taxes.

AASB18 clarifies the definitions of the operating category and operating profit, ensuring consistency in how the company’s results are presented. There are new requirements for categorising and disclosing expenses, allowing for a more flexible presentation compared to the current binary classification based on function and nature.

2. Disclosure of how management views the performance

Many companies, especially listed entities, choose to report alternative performance measures, also referred to as “non-IFRS”, such as adjusted earnings, EBITDA, or adjusted EBITDA. Some of those measures will become Management-defined Performance Measures (MPMs) and will be subject to the new standard’s disclosure requirements.

If a company reports MPMs in other areas of reporting, such as the directors’ report, it must bring that information into the notes of the financial statements and reconcile it back to the nearest subtotal in the profit or loss statement. The tax and non-controlling interest (NCI) impacts of those reconciliation items must also be disclosed.

Management must explain in the notes the reasons for selecting the MPMs and any changes to these measures. All the MPMs and related disclosures will be subject to audit as they form part of the notes.

3. Grouping and labelling of information

There are enhanced requirements regarding the grouping of information and the disclosure of items labelled “other”. Further guidance is now available on how and when to aggregate or disaggregate information. 

Although AASB 18 primarily impacts the profit or loss statement, the new aggregate and disaggregated requirements may also impact on other areas of the financial statements.

Companies are also now required to present interest and dividends received under ‘investing cash flows’, while payments must be recorded under financing. Previous accounting policy choices regarding such presentations have been removed.

What will be the impact?

The adoption of the new standards is expected to have a major impact across all Tier 1 financial reports. Management will need to consider whether any of its contracts and remuneration, often linked to profit or loss, will be affected. Loan covenants linked to profit or loss may also need to be clarified.

Depending on existing systems and reporting processes, the financial reporting impact ranges from remapping the chart of accounts to requiring changes in systems and processes. For example, properly categorising foreign exchange transactions could be complex.

Companies will need to train internal staff involved in financial reporting and communicate changes to various internal and external stakeholders, as these changes may also impact on budgeting and forecasting tools and reports.

When to take action?

The new standard will be mandatory for the first time on 1 January 2027. For entities with a December year-end, this means it will apply to the year ending 31 December 2027. Comparative information will also be required.

Many listed companies report interim financial reports; AASB 18 will be applicable for any interim reporting starting 1 January 2027. 

Early adoption of the new requirement is permitted by the standard.

What about NFP and Tier 2 reporters?

For Tier 1 not-for-profit entities, the mandatory effective date is 1 January 2028, which is  one year later compared to their for-profit counterparts.

At this stage, AASB 18 does not apply to those preparing financial reports under the Simplified Disclosures Standard, commonly known as “Tier 2”. AASB is currently working on strategies for Tier 2 entities.

How SW can help

Our team of audit and assurance experts are fully informed of the requirements of the new accounting standard and can assist with providing guidance for your business, as well as keeping you abreast of developments from an Australian reporting context.

We can:

• provide additional information and training for staff 
• conduct an impact assessment and provide recommendations.

Reach out to your SW contacts or the key contacts here for a conversation.

Contributor

Jimmy Cao

The post AASB 18: Key changes in presentation of profit & loss of listed entities appeared first on SW Accountants & Advisors.

重点税务与财务事宜更新总汇 | Summary of key tax & accounting matters 

• 澳大利亚税务局最新税收裁定与指导意见
  Recent Key Taxpayer Alerts & Guidance
• 近期重大税务案件回顾
  Recap of key cases
• 转让定价最新消息
  Key Transfer Pricing updates
• 上期财务知识更新讲座内容回顾
  ​Previous accounting update session recap
  • 现代奴役制合规申报
    Modern Slavery Statement
  • 由2020年及2021年1月1日起生效的会计准则变更
    Standards amendments effective 1 January 2020 and 2021 onwards
• ASIC 最新消息及其他条例变化
  ASIC update and other regulatory changes
• 取消特殊目的财务报告
  Removal of Special Purpose Financial Reporting
• 澳大利亚会计准则变更2020-3号 (2022年1月1日起生效)
  Amendments to Australian Accounting Standards 2020-3 (effective 1 January 2022 onwards)

专家团队 | Our experts

张洋 Bessie Zhang 合伙人 Partner E bzhang@sw-au.com		叶嘉 James Ye 合伙人 Partner E jye@sw-au.com			栾万博 Leo Luan 总监 Associate Director E lluan@sw-au.com
林长春 Neville Lin 高级经理 Senior Manager E nlin@sw-au.com		施洋 Yang Shi 总监 | 转让定价专家 Associate Director | Transfer Pricing Specialist E yshi@sw-au.com			陈泓洋 Michael Chen 经理 Manager E mchen@sw-au.com

联系我们 Contact us

若您有任何疑问或想了解更多详情，欢迎通过 marketing@sw-au.com 联系本所市场团队。
If you have any queries or would like more information, please contact the Marketing team via marketing@sw-au.com.

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Follow our WeChat account to stay updated on insights and our other webinars.

The post 全中文税务与财务更新讲座 | Mandarin Tax and Accounting update appeared first on SW Accountants & Advisors.

Introduction

Whilst the removal of Special Purpose Financial Statements (SPFS) has yet to impact Not-for-Profit entities (NFPs), the AASB has introduced AASB 2019-4.

NFPs preparing SPFS from 30 June 2020 must now disclose its compliance with the recognition and measurement (R&M) requirements to the Australian Accounting Standard (AAS), including consolidation and equity accounting requirements.

Who is affected?

• Medium and large ACNC charities preparing SPFS that compliywith ACNC reporting requirements
• NFP entities lodging SPFS with ASIC (e.g. companies limited by guarantee)

Who is not affected?

• ACNC small charities
• ACNC charities not required to comply with ACNC reporting requirements due to transitional reporting arrangements
• NFP public sector entities
• FP and FP public sector entities preparing SPFS

What action must be taken?

1. Review existing accounting policies and R&M requirements in AAS to assess impact on any future transition from SPFS to any potential new reporting requirements
2. Draft disclosure in SPFS for approval by those charged with governance prior to year end

What are the disclosure requirements?

• The basis on which the decision to prepare SPFS was made
• Accounting policy in SPFS
  • Disclose an indication of where the accounting policy does not comply with the R&M requirements in AAS (except for consolidation and equity accounting), or
  • State that assessment on compliance has not been made
• Overall compliance with R&M requirements
  • Disclose whether or not, the SPFS overall comply with the R&M requirements in AAS (except for consolidation and equity accounting), or
  • State that such an assessment has not been made
• Application of consolidation and equity accounting requirements
  • Disclose whether or not interests in subsidiaries, associates or joint ventures have been consolidated or equity accounted consistent with requirements in AASB 10 and AASB 128. If not, disclose that fact and the reasons why
  • If assessment has not been made and not required by legislation to do so, disclose that no assessment has been made

Reference

Important Dates

Annual reporting periods ending on or after 30 June 2020.

How ShineWing Australia can assist

Contact one of our experts below to discuss how these financial reporting disclosure requirements affect your existing accounting policies.

Contacts

The post NFP Special Purpose Financial Statements appeared first on SW Accountants & Advisors.

Join us to hear firsthand how leading organisations are utilising innovation and technology to transform their tax reporting and finance function.

Our guest presenters will also shine the spotlight on contemporary reporting issues including:

• Reporting under the new Accounting Standards
• Determining uncertain or reportable tax positions
• Artificial Intelligence and the (Present) Future of Law
• Trends in tax automation and analytics

Event details

Date: Thursday, 20 September 2018 
Time: 8:30am for 9:00am start, concluding at 12:00pm (breakfast and morning tea included)
Venue: ShineWing Australia, Level 10, 530 Collin Street, Melbourne 

Presenters

Ms Kris Peach

Chair and CEO of the Australian Accounting Standards Board

Kris Peach is the Chair of the Australian Accounting Standards Board. Kris has extensive experience in accounting standards setting. She previously served on the AASB as both a member and as the Deputy Chair, and as a member of the Australian Urgent Issues Group. Kris was previously a partner in KPMG’s International Standards Group and Australia’s Department of Professional Practice, interpreting complex technical accounting issues for a wide range of public and private entities. She also had a number of international financial reporting leadership roles within the firm.

Kris has been mentioned in the AFR as someone who would bring a fresh perspective and collaborative approach to her role at the AASB.

Mr Mark Bird

General Manager Taxation, Australian Unity

Mark leads the group tax function at the Australian Unity Group. Mark is responsible for the management and coordination of all tax matters for the Group. He has also held tax leadership roles at Village Roadshows and CUB Ltd.

Mark regularly presents and publishes articles on key tax issues. He has also written submissions to Treasury and the ATO on policy and tax interpretative matters.

Mark adopts a progressive and innovative approach to the tax function.

Mark will share with us his journey of implementing a transformation plan for the Group’s tax compliance function utilizing automation and robotics.

Mr Adrian Cartland

Principal at Cartland Law, Creator of Ailira

Adrian Cartland, the 2017 Young Lawyer of the Year, has worked as a tax lawyer in top tier law firms as well as boutique tax practices. He is now the Principal of Cartland Law, a boutique tax and commercial law firm. Adrian is also the Creator of Ailira, the Artificially Intelligent Legal Information Research Assistant, which automates legal research and information. Ailira has enabled non-professionals to pass University Tax Law exams and is currently used by hundreds of Australian tax lawyers and accountants for tax research and to unlock internal intellectual property. Ailira can also provide tailored legal information to consumers, initially in the areas of Domestic Violence (for which Cartland Law has already delivered a SA Government funded prototype), Business Structuring, and Wills and Estates. Ailira has powered the world’s first Law Firm Without Lawyers. Adrian is known for his innovative advice and ideas and also for his entertaining and insightful professional speeches.

Mr Daren Yeoh

Partner at ShineWing Australia

Daren has over 20 years’ experience advising corporate and multinational groups on all aspects of Australian and International tax law. Daren led the development of ShineWing Australia’s Complete Tax Solutions software which assist corporate groups to achieve greater speed, efficiency and integrity in their tax reporting and compliance processes. The CTS suite of software solutions have since expanded to include CTS for Trusts and AMITs, CTS Employee Share Scheme reporting, CTS Country by Country reporting, CTS Time Manager and other CTS solutions.  Daren is passionate about innovation in tax and Daren and his team have been exploring ways in which digital technology could be used to deliver greater value and solutions to clients.

Mr Andrew Nutman

Associate Directorat ShineWing Australia

Andrew has built a reputation as a leading GST advisor in Australia and is a long standing member of the Australian Taxation Institute GST Committee and the Property Council GST Committee.  Andrews’ more than 30 years GST experience includes twelve years as a Value Added Tax advisor in London in advance his move to Australia as a GST advisor at the end of 1998. More recently Andrew has relevantly been involved in:

• GST policies and procedures reviews for a number of clients across a range of services businesses;
• GST apportionment review and recovery optimization implementations;
• Designing GST Governance methodologies;
• Performing post ERP implementation  reviews;
• Working on global  GST and VAT supply chain solution; and
• GST data analytics reviews and ATO GST audit liaison and dispute resolution

Mr David Wilson

Associate Director at ShineWing Australia

David has been advising and assisting clients in respect of indirect taxes for over 25 years. David started his career as a customs broker, assisting clients with the facilitation of import/export. This evolved into the provision of professional advice and assistance regarding many aspects of Customs and international trade, ranging from large scale regular importations through to project specific capital importations. David regularly assists importers to proactively ensure customs duty is not overpaid, both in respect of the past and the future. Similarly, David has been very active for many years in assisting clients to maximise their Fuel Tax Credit claims (including predecessor schemes), capturing past and future savings. David is uniquely placed to combine a wealth of practical, pragmatic experience gained at the coalface with the useful insights that data analytics facilitates. David is regularly engaged to assist clients to maximise opportunities while managing risk. He is not only well regarded by clients, but also other stakeholders, having recently completed a stint on the Institute of Chartered Accountant’s Indirect Tax Committee, and he is currently a member of the Australian Taxation Office Fuel Schemes Stakeholder Group.

Registration and more information

For more information about this event, please contact the ShineWing Australia Marketing team via marketing@sw-au.com.

The post Complete Tax Solutions (CTS) Conference 2018 appeared first on SW Accountants & Advisors.