ACT ACCOUNTING POLICY
Treatment of
AASB Standards issued
which are not yet effective
as at 30 June 2014
For reporting periods ending on
30 June 2014
ACT Accounting Policy —AASB Standards issued which are not yet effective
as at 30 June 2014
TABLE OF CONTENTS
1 INTRODUCTION ..................................................................................................................................................................... 1
1.1
APPLICATION ................................................................................................................................................................ 1
2 TREATMENT OF AASB STANDARDS ISSUED WHICH ARE NOT YET EFFECTIVE .................................................................... 1
2.1
DISCLOSURES REQUIRED FOR STANDARDS ISSUED BUT NOT YET EFFECTIVE ............................................................................... 1
3 SUMMARIES OF CHANGES TO STANDARDS AND INTERPRETATIONS ISSUED BUT NOT YET EFFECTIVE ............................ 2
3.1
AASB 9 FINANCIAL INSTRUMENTS (APPL. 1 JAN 2018) ....................................................................................................... 4
3.2
AASB 10 CONSOLIDATED FINANCIAL STATEMENTS (APPL. 1 JAN 2014 FOR NOT-FOR-PROFIT ENTITIES)........................................ 6
3.3
AASB 11 JOINT ARRANGEMENTS (APPL. 1 JAN 2014 FOR NOT-FOR-PROFIT ENTITIES) ............................................................... 7
3.4
AASB 12 DISCLOSURE OF INTERESTS IN OTHER ENTITIES (APPL. 1 JAN 2014 FOR NOT-FOR-PROFIT ENTITIES) ................................ 8
3.5
AASB 14 REGULATORY DEFERRAL ACCOUNTS (APPL. 1 JAN 2016) ....................................................................................... 8
3.6
AASB 127 SEPARATE FINANCIAL STATEMENTS (APPL. 1 JAN 2014 FOR NOT-FOR-PROFIT ENTITIES) ............................................. 8
3.7
AASB 128 INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (APPL. 1 JAN 2014 FOR NOT-FOR-PROFIT ENTITIES)....................... 9
3.8
AASB 1031 MATERIALITY (APPL. 1 JAN 2014) ................................................................................................................. 9
3.9
AASB 1055 BUDGETARY REPORTING (APPL. 1 JULY 2014) ............................................................................................... 10
3.10
AASB 1056 SUPERANNUATION ENTITIES (APPL. 1 JUL 2016) ............................................................................................ 11
3.11
AASB 2010-7 AMENDMENTS TO AUSTRALIAN ACCOUNTING STANDARDS ARISING FROM AASB 9 (APPL. 1 JAN 2018) ................ 11
3.12
AASB 2011-7 AMENDMENTS TO AUSTRALIAN ACCOUNTING STANDARDS ARISING FROM THE CONSOLIDATION AND JOINT
ARRANGEMENTS STANDARDS (APPL. 1 JAN 2014 FOR NOT-FOR-PROFIT ENTITIES) .................................................................. 15
3.13
AASB 2012-3 AMENDMENTS TO AUSTRALIAN ACCOUNTING STANDARDS – OFFSETTING FINANCIAL ASSETS AND FINANCIAL LIABILITIES
(APPL. 1 JAN 2014) ................................................................................................................................................... 15
3.14
AASB 2013-1 AMENDMENTS TO AASB 1049- RELOCATION OF BUDGETARY REPORTING REQUIREMENTS (APPL. 1 JULY 2014) .... 16
3.15
AASB 2013-3 AMENDMENTS TO AASB 136 – RECOVERABLE AMOUNT DISCLOSURES FOR NON – FINANCIAL ASSETS (APPL. 1 JAN
2014) ...................................................................................................................................................................... 16
3.16
AASB 2013-4 AMENDMENTS TO AUSTRALIAN ACCOUNTING STANDARDS – NOVATION OF DERIVATIVES AND CONTINUATION OF HEDGE
ACCOUNTING (APPL. 1 JAN 2014) ................................................................................................................................ 17
3.17
AASB 2013-5 AMENDMENTS TO AUSTRALIAN ACCOUNTING STANDARDS – INVESTMENT ENTITIES (APPL. 1 JAN 2014) ............... 17
3.18
AASB 2013-6 AMENDMENTS TO AASB 136 ARISING FROM REDUCED DISCLOSURE REQUIREMENTS (APPL. 1 JAN 2014)............. 18
3.19
AASB 2013-7 AMENDMENTS TO AASB 1038 ARISING FROM AASB 10 IN RELATION TO CONSOLIDATION AND INTERESTS OF
POLICYHOLDERS (APPL. 1 JAN 2014) ............................................................................................................................. 18
3.20
AASB 2013-8 AMENDMENTS TO AUSTRALIAN ACCOUNTING STANDARDS – AUSTRALIAN IMPLEMENTATION GUIDANCE FOR NOT-FORPROFIT ENTITIES – CONTROL AND STRUCTURED ENTITIES (APPL. 1 JAN 2014) ....................................................................... 18
3.21
AASB 2013-9 AMENDMENTS TO AUSTRALIAN ACCOUNTING STANDARDS – CONCEPTUAL FRAMEWORK, MATERIALITY AND FINANCIAL
INSTRUMENTS (PART B MATERIALITY APPL. 1 JAN 2014 AND PART C FINANCIAL INSTRUMENTS APPL. 1 JAN 2015) .................... 19
3.22
AASB 2014-1 AMENDMENTS TO AUSTRALIAN ACCOUNTING STANDARDS (PART A ANNUAL IMPROVEMENTS 2010-2012 AND 20112013 CYCLES (APPL. 1 JAN 2014), PART B DEFINED BENEFIT PLANS: EMPLOYEE CONTRIBUTIONS (AMENDMENTS TO AASB 119)
i
ACT Accounting Policy —AASB Standards issued which are not yet effective
as at 30 June 2014
(APPL. 1 JULY 2014); PART C – MATERIALITY (APPL. 1 JULY 2014); PART D – CONSEQUENTIAL AMENDMENTS ARISING FROM AASB
14 REGULATORY DEFERRAL ACCOUNTS (APPL. 1 JAN 2016); AND PART E – FINANCIAL INSTRUMENTS (APPL. 1 JAN 2015 EXCEPT
PARAGRAPHS 64-72 (APPL. 1 JAN 2017 AND PARAGRAPHS 73-107 (APPL. 1 JAN 2018) ....................................................... 20
3.23
AASB 2014-2 AMENDMENTS TO AASB 1053 – TRANSITION TO AND BETWEEN TIERS, AND RELATED TIER 2 DISCLOSURE
REQUIREMENTS (APPL. 1 JAN 2014) ............................................................................................................................. 22
3.24
AASB INTERPRETATION 21 LEVIES (APPL. 1 JAN 2014) ..................................................................................................... 23
ATTACHMENT A ........................................................................................................................................................................ 24
ii
ACT Accounting Policy —AASB Standards issued which are not yet effective
as at 30 June 2014
1 Introduction
1.1
Application
This ACT Accounting Policy applies to directorates and territory authorities and covers Australian
Accounting Standards and Interpretations which have been issued as at 30 June 2014 that are not yet
effective. These standards and interpretations will apply during later reporting periods than 2013-14.
2 Treatment of AASB Standards Issued Which are Not Yet Effective
2.1
Disclosures Required for Standards Issued but Not yet Effective
When a directorate or territory authority has not early adopted a new accounting standard, due to the
fact that the standard is effective (i.e. compulsory) in a later reporting period, AASB 108 Accounting
Policies, Changes in Accounting Estimates and Errors requires the directorate or territory authority to
disclose details regarding that standard and its potential financial impact on the financial statements
which may occur when the standard is applied. AASB 108.30 and 31 contain the disclosure
requirements.
This policy paper has been developed to assist agencies in making these disclosures. As such, this paper
provides an indication of what changes have been included in standards which have been issued but are
not yet effective. This will assist agencies in identifying which of the standards may have a potential
material financial impact on them when they are applied.
Agencies are required to:
1. Identify those standards that will apply to their agency upon application, by reading this
policy;
2. Assess whether there may be a material financial impact upon the agency (for all standards
and interpretations that will apply) by reviewing the changes listed in this policy and referring
directly to the standards and/or interpretations;
3. Disclose details of the standards and interpretations which apply but are assessed as not
having a material financial impact, in the format as presented in the 2013-14 Model Financial
Statements (and appendix A); and
4. Disclose details of the standards and interpretations which apply and are assessed as having a
material financial impact, as per AASB 108.30 and 31.
For disclosure requirements, agencies should refer to Attachment A as it provides an updated Note 2(af)
Impact of Accounting Standards Issued but yet to be Applied disclosure which contains a list of standards
and interpretations, which are assessed as being applicable to ‘Example Agency’, that have been issued
but are not yet effective to the 2013-14 financial year. This updates the example provided within
Note 2(af) as presented in the 2013-14 Model Financial Statements.
1
ACT Accounting Policy —AASB Standards issued which are not yet effective
as at 30 June 2014
The Note 2(af) disclosure in Attachment A and in the Model assumes that there is not a material
financial impact on ‘Example Agency’ resulting from standards issued but not yet effective. If these
standards have a material financial impact on an agency the note disclosure will need to be amended
accordingly.
Note that only standards issued but not yet effective which are applicable to an agency must be
included in Note 2(af). Agencies should also check the additional standards listed in the commentary to
Note 2 (as appearing in Attachment A). These standards have been assessed as not applicable to most
agencies; however, agencies should verify that they don’t apply.
3 Summaries of Changes to Standards and Interpretations Issued but Not
yet Effective
The following standards and interpretations, currently issued by the AASB, which apply to reporting
periods ending after 30 June 2014 include:
AASB Compiled Standards
AASB 9
Financial Instruments
AASB 10
Consolidated Financial Statements
AASB 11
Joint Arrangements
AASB 12
Disclosure of Interests in Other Entities
AASB 14
Regulatory Deferral Accounts
AASB 127
Separate Financial Statements
AASB 128
Investments in Associates and Joint Ventures
AASB 1031
Materiality
AASB 1055
Budgetary Reporting
AASB 1056
Superannuation Entities
AASB Amending Standards
AASB 2010-7
Amendments to Australian Accounting Standards arising from AASB 9 (December 2010)
AASB 2011-7
Amendments to Australian Accounting Standards arising from the Consolidation and
Joint Arrangement Standards (for not-for profit entities only)
AASB 2012-3
Amendments to Australian Accounting Standards – Offsetting Financial Assets and
Liabilities
AASB 2013-1
Amendments to AASB 1049 – Relocation of Budgetary Reporting Requirements
AASB 2013-3
Amendments to AASB 136 – Recoverable Amount Disclosures for Non-Financial Assets
AASB 2013-4
Amendments to Australian Accounting Standards – Novation of Derivatives and
Continuation of Hedge Accounting
AASB 2013-5
Amendments to Australian Accounting Standards – Investment Entities
AASB 2013-6
Amendments to AASB 136 arising from Reduced Disclosure Requirements
AASB 2013-7
Amendments to AASB 1038 arising from AASB 10 in relation to consolidation and the
interests of policy holders
2
ACT Accounting Policy —AASB Standards issued which are not yet effective
as at 30 June 2014
AASB 2013-8
AASB 2013-9
AASB 2014-1
AASB 2014-2
Interpretations
Interpretation 21
Amendments to Australian Accounting Standards – Australian Implementation
Guidance for Not-for-Profit Entities
Amendments to Australian Accounting Standards – Conceptual Framework, Materiality
and Financial Instruments
Amendments to Australian Accounting Standards
Amendments to AASB 1053 – Transition to and between Tiers, and related Tier 2
Disclosure Requirements
Levies
3
ACT Accounting Policy —AASB Standards issued which are not yet effective
as at 30 June 2014
3.1
AASB 9 Financial Instruments (Appl. 1 Jan 2018)
Background
The Financial Instruments project is designed to replace IAS 39 Financial Instruments: Recognition and
Measurement (AASB 139 Financial Instruments: Recognition and Measurement) with a new standard to
simplify the recognition, classification and measurement requirements for financial instruments. The
project was added to the IASB agenda in 2008 and has three phases.
Phase 1: Classification and Measurement
AASB 9 Financial Instruments was published in December 2009 and contained requirements for financial
assets. Requirements for financial liabilities were added to AASB 9 in December 2010. Most of the
requirements for financial liabilities were carried forward unchanged from AASB 139. Some changes
were made to the fair value option for financial liabilities to address the issue of own credit risk.
In February 2014 the IASB finalised its deliberations on limited amendments to the classification and
measurement requirements of IFRS 9 Financial Instruments and these amendments will be incorporated
into IFRS 9. The AASB currently expects a these changes to incorporated into AASB 9 later in 2014.
Phase 2: Impairment Methodology
The Exposure Draft Financial Instruments: Expected Credit Losses was published in March 2013. In
February 2014 the IASB finalised its deliberations on impairment for financial instruments and these
amendments will be incorporated into IFRS 9. The AASB currently expects these changes to be
incorporated into AASB 9 later in 2014.
Phase 3: Hedge Accounting
The AASB released AASB 2013-9 Amendments to Australian Accounting Standards – Conceptual
Framework, Materiality and Financial Instruments in December 2013. Part C Financial Instruments
inserts Chapter 6 Hedge Accounting into AASB 9 Financial Instruments.
Application Date
AASB 2013-9 Part C also extended the mandatory date of AASB 9 by 2 years to annual reporting periods
beginning on or after 1 January 2017. AASB 2014-1 further extended the application date of AASB 9 to
annual reporting periods beginning on or after 1 January 2018.
Changes
The following changes, in the treatment of financial assets, have arisen as a result of the introduction of
AASB 9 now applicable to reporting periods commencing on or after 1 January 2018:
 Financial assets will be classified differently. Financial assets will only be classified as:
o financial assets measured at amortised cost; or
o financial assets at fair value through profit or loss.
The determining criteria will be based on:
4
ACT Accounting Policy —AASB Standards issued which are not yet effective
as at 30 June 2014
a) the objective of the entity’s business model for managing financial assets, and
b) the characteristics of the contractual cash flows.
This will replace the four categories of financial assets in AASB 139, which are:
o Financial asset at fair value through profit or loss;
o Held-to-maturity financial assets;
o Loans and receivables; and
o Available-for-sale financial assets.
 Where an agency holds an asset or portfolio of assets with the main objective to collect contractual
cash flows on specific dates and those cash flows are generally in the form of principal and/or
interest, these assets will be measured at amortised cost.
 Any financial asset not measured at amortised cost, because it does not meet the criteria above,
must be measured at fair value.
 When AASB 9 is applied, agencies will be required to assess the classification of all financial assets
currently held, and apply any changes in measurement and recognition retrospectively in accordance
with AASB 108.
 On application of AASB 9, the measurement basis for an agency’s cash at bank, receivables, and
investments with the Territory Banking Account cash enhanced portfolio, are not likely to change.
However, as a result of the new measurement criteria being dependent upon the agency’s business
model (i.e. whether the investment is managed with a view for capital growth or to collect
contractual cash flows) the measurement basis for an agency’s investments with the TBA in the fixed
interest portfolio may change from fair value to amortised cost.
 Agencies should analyse their own financial assets to determine the correct classification and
measurement basis for their financial assets. A change in measurement basis, may give rise to a
material financial impact on agency’s financial statements.
 An irrevocable election is available at initial recognition, to present in other comprehensive income,
changes in fair value of an investment in an equity instrument that is not held for trading. Dividends,
which are a return on investment, can be recognised in profit or loss.
 Financial assets can be reclassified in instances where the agency’s business model changes.
 Financial assets can be designated and measured at fair value, if doing so eliminates, or significantly
reduces, a measurement or recognition inconsistency.
5
ACT Accounting Policy —AASB Standards issued which are not yet effective
as at 30 June 2014
Changes in the treatment of financial assets that will most likely only be applicable to agencies such as
the Territory Banking Account and the Superannuation Provision Account.
 Agencies that have hybrid contracts which contain a host that is an asset within the scope of AASB 9
shall treat the whole contract in accordance with AASB 9.
 Investments in unquoted equity instruments must be measured at fair value, however, in some
instances cost may be an appropriate estimate of fair value.
 Investments in contractually linked instruments, that create concentrations of credit risk, are
classified and measured using a ‘look through’ approach. This approach looks through to the
underlying assets generating cash flows and assesses the cash flows against the classification criteria.
In reissuing AASB 9 (December 2010) the derecognition requirements for financial instruments and the
recognition and measurement requirements for financial liabilities were transferred from AASB 139.

AASB 9 will not allow re-classification of financial liabilities.

The only significant change is to require that portion of a change of fair value relating to an entity’s
own credit risk for financial liabilities measured at fair value using the fair value option, to be
separately presented in other comprehensive income (OCI), except when that would create an
accounting mismatch. If such a mismatch would be created or enlarged, agencies are required to
present all changes in fair value (including the effects of changes in the credit risk of the liability) in
profit or loss.

In relation to financial liabilities that are loan commitments or financial guarantee contracts, all gains
and losses must be recognised in the operating result.
The hedge accounting additions to AASB 9 should not generally impact on ACT directorates and territory
authorities.
Agencies should review AASB 9 and examine the transitional requirements included in this standard.
Detailed guidance will be provided to agencies prior to AASB 9 having to be applied.
3.2
AASB 10 Consolidated Financial Statements (Appl. 1 Jan 2014 for not-for-profit entities)
Background
AASB 10 was released in August 2011 as one of a suite of six new and revised standards in response to
the completion of Stage 1 of the IASB consolidation project in May 2011. It requires a parent to present
consolidated financial statements, replacing the requirements previously contained in AASB 127
Consolidated and Separate Financial Statements and Interpretation 112 Consolidation – Special Purpose
Entities (both now superseded). This Standard applies to both for-profit and not-for-profit entities but
with different application dates; 1 January 2013 for for-profit entities and 1 January 2014 for not-forprofit entities as set out in AASB 2012-10 Amendments to Australian Accounting Standards – Transition
Guidance and Other Amendments.
AASB 10 contains a revised definition of control that will apply to all entities and will require significantly
more judgement to determine whether control exists, particularly when the ownership percentage is
6
ACT Accounting Policy —AASB Standards issued which are not yet effective
as at 30 June 2014
50% or less. It is based on assessing the "power to direct activities that significantly affect returns",
rather than the "power to govern the financial and operating policies" currently used by AASB 127. The
broader test will require entities to not only consider their holdings and rights but also the holdings and
rights of other shareholders in order to determine whether they have the necessary power for
consolidation purposes.
AASB 2013-8 Amendments to Australian Accounting Standards – Australian Implementation Guidance
for Not-for-Profit Entities – Control and Structured Entities adds Appendix E Australian Implementation
Guidance to AASB 10. The new appendix does not apply to for profit entities or affect their application
of AASB 10. The guidance explains the various principles in AASB 10 regarding the criteria for
determining whether a not-for-profit entity controls another entity and illustrates the principles with
examples. Appendix E covers aspects of the three criteria set out in AASB 10.7 for control of an investee
by an investor (i.e. power over the investee, returns to the investor and the link between power and
returns). It explains that the basic terms ‘investor’ and ‘investee’ in AASB 10 refer to entities that have a
relationship in which control of one entity (the investee) by the other (the investor) might arise. The
guidance also addresses protective and substantive rights and the relevance of non-financial returns in
applying the control criteria. A range of comprehensive examples are also included to illustrate the
principles.
Resulting from this additional guidance, agencies will need to reassess the nature of their relationship
with other entities, including entities that are not currently consolidated.
As most directorates and territory authorities are not involved with consolidated financial statements
this standard will not apply to them.
3.3
AASB 11 Joint Arrangements (Appl. 1 Jan 2014 for not-for-profit entities)
Background
AASB 11 was released in August 2011 as one of a suite of six new and revised standards in response to
the completion of Stage 1 of the IASB consolidation project in May 2011. Changes in the definitions
have reduced the types of joint arrangements to two: joint operations and joint ventures. The existing
policy choice of proportionate consolidation for jointly controlled entities has been eliminated. Equity
accounting is mandatory for participants in joint ventures. Entities that participate in joint operations
will follow accounting much like that for joint assets or joint operations currently.
This Standard applies to both for-profit and not-for-profit entities with the different application dates of
1 January 2013 for for-profit entities and 1 January 2014 for not-for-profit entities as set out in AASB
2012-10 Amendments to Australian Accounting Standards – Transition Guidance and Other
Amendments.
AASB 11 supersedes AASB 131 Interests in Joint Ventures and Interpretation 113 Jointly Controlled
Entities - Non-Monetary Contributions by Venturers. It responds to concerns that the superseded
standard required the legal form of an arrangement to determine the accounting and allowed an
accounting option that undermined comparability between entities. AASB 11 is aimed at better
reflecting the underlying economics by requiring the financial statements of a party to a joint
arrangement to reflect its rights and obligations arising from the arrangement.
7
ACT Accounting Policy —AASB Standards issued which are not yet effective
as at 30 June 2014
As directorates and territory authorities do not generally engage in joint arrangements, there is no
discussion of the detailed changes in this paper.
3.4
AASB 12 Disclosure of Interests in Other Entities (Appl. 1 Jan 2014 for not-for-profit entities)
Background
AASB 12 was released in August 2011 as one of a suite of six new and revised standards in response to
the completion of Stage 1 of the IASB consolidation project in May 2011. The Standard enables
Australian reporting entities that have an interest in a subsidiary, a joint arrangement, an associate or an
unconsolidated structured entity to continue to satisfy the disclosure objectives of International
Financial Reporting Standards.
The Standard focuses on disclosures that would help users better assess the nature and financial effects
of an entity's involvement with other entities, and in particular enhances disclosures about consolidated
and unconsolidated structured entities. This Standard applies to both for-profit and not-for-profit
entities with the different application dates of 1 January 2013 for for-profit entities and 1 January 2014
for not-for-profit entities as set out in AASB 2012-10 Amendments to Australian Accounting Standards –
Transition Guidance and Other Amendments.
In respect of AASB 12 Disclosure of Interests in Other Entities the implementation guidance in AASB
2013-8 Amendments to Australian Accounting Standards – Australian Implementation Guidance for Notfor-Profit Entities – Control and Structured Entities explains the application of the AASB 12 definition of
‘structured entity’ by not-for-profit entities. This affects the disclosures that a not-for-profit entity
would have to make in its general purpose financial statements to meet the requirements of AASB 12.
As ACT directorates and territory authorities do not generally have interests in other entities, there is no
discussion of detailed changes in this paper.
3.5
AASB 14 Regulatory Deferral Accounts (Appl. 1 Jan 2016)
Background
AASB 14 Regulatory Deferral Accounts is an interim standard pending completion by the IASB of a
comprehensive project on rate regulated activities. It is applicable to first time adopters of IFRS that
provide goods or services to customers at a price that is rate regulated by government e.g. the supply of
electricity or water.
As ACT directorates and territory authorities have already adopted IFRS and are not generally involved
in rate regulated activities this standard will not apply to them.
3.6
AASB 127 Separate Financial statements (Appl. 1 Jan 2014 for not-for-profit entities)
Background
AASB 127 was released in August 2011 as one of a suite of six new and revised standards in response to
the completion of Stage 1 of the IASB consolidation project in May 2011. The amended Standard
contains accounting and disclosure requirements for investments in subsidiaries, joint ventures and
8
ACT Accounting Policy —AASB Standards issued which are not yet effective
as at 30 June 2014
associates when an entity prepares separate financial statements. The key change is the relocation of
the requirements relating to consolidated financial statements to AASB 10 Consolidated Financial
Statements. There have been minimal changes in the requirements concerning separate financial
statements. This Standard applies to both for-profit and not-for-profit entities with the different
application dates of 1 January 2013 for for-profit entities and 1 January 2014 for not-for-profit entities
as set out in AASB 2012-10 Amendments to Australian Accounting Standards – Transition Guidance and
Other Amendments.
As most directorates and territory authorities are not involved with investments in subsidiaries, joint
ventures, and associates when they prepare separate financial statements, this standard will not apply
to them.
3.7
AASB 128 Investments in Associates and Joint Ventures (Appl. 1 Jan 2014 for not-for-profit
entities)
Background
AASB 128 was released in August 2011 as one of a suite of six new and revised standards in response to
the completion of Stage 1 of the IASB consolidation project in May 2011. The amended Standard
prescribes the accounting for investments in associates and sets out the requirements for the
application of the equity method when accounting for investments in associates and joint ventures.
The standard defines 'significant influence' and provides guidance on how the equity method of
accounting is to be applied (including exemptions from applying the equity method in some cases). It
also prescribes how investments in associates and joint ventures should be tested for impairment. This
Standard applies to both for-profit and not-for-profit entities with the different application dates of 1
January 2013 for for-profit entities and 1 January 2014 for not-for-profit entities as set out in AASB
2012-10 Amendments to Australian Accounting Standards – Transition Guidance and Other
Amendments.
As most directorates and territory authorities are not involved with investments in associates and joint
ventures, this standard will not apply to them.
3.8
AASB 1031 Materiality (Appl. 1 Jan 2014)
Background
The revised AASB 1031 is an interim standard that cross-references to other standards and the
Framework for the Preparation and Presentation of Financial Statements (Framework) that contain
guidance on materiality. The AASB is progressively removing references to AASB 1031 in all standards
and interpretations and once all these references have been removed, AASB 1031 will be withdrawn.
Therefore the only guidance about materiality available in accounting pronouncements will be what is in
AASB 101 Presentation of Financial Statements, AASB 108 Accounting Policies, Changes in Accounting
Estimates and Errors, and the Framework.
The withdrawal of AASB 1031 is not expected to impact practice regarding the application of materiality
in financial reporting and the level of disclosure by directorates and territory authorities.
9
ACT Accounting Policy —AASB Standards issued which are not yet effective
as at 30 June 2014
3.9
AASB 1055 Budgetary Reporting (Appl. 1 July 2014)
Background
Prior to the release of AASB 1055 Budgetary Reporting, apart from AASB 1049 Whole of Government
and General Government Sector Financial Reporting which contained budgetary reporting requirements
for the whole of government and General Government Sector (GGS), there were no requirements in
Australian Accounting Standards addressing budgetary reporting by public sector entities. AASB 1055
sets out the budgetary reporting requirements for not-for-profit entities within the GGS, and, together
with AASB 2013-1 Amendments to AASB 1049 – Relocation of Budgetary Reporting Requirements,
relocates the corresponding budgetary reporting requirements for the whole of government and GGS
from AASB 1049. AASB 1055 does not apply to for-profit agencies
Changes
When any of the following budgeted statements for controlled items are presented to the Legislative
Assembly and are separately identified as relating to a not-for-profit agency:

Operating Statement

Balance Sheet;

Statement of Changes in Equity; or

Cash Flow Statement;
The identified agency will need to disclose:

The original budget figures as presented to the Legislative Assembly, in a form that is consistent
with the agency’s annual financial statements; and

Explanations of major variances between actual amounts presented in the financial statements
and the corresponding individual budget amounts.
Where a directorate presents budgeted Territorial Statements to the Legislative Assembly that are
separately identified as relating to that directorate, it will need to disclose:

The original budget figures as presented to the Legislative Assembly, in a form that is consistent
with the directorate’s annual financial statements; and

Explanations of major variances between actual amounts presented in the financial statements
and the corresponding individual budget amounts.
Comparative controlled and territorial budget information in respect of the previous period need not be
disclosed.
More detailed guidance will be provided to agencies on the implementation of AASB 1055 prior to the
preparation of the 2014-15 financial statements.
10
ACT Accounting Policy —AASB Standards issued which are not yet effective
as at 30 June 2014
3.10 AASB 1056 Superannuation Entities (Appl. 1 Jul 2016)
Background
AASB 1056 Superannuation Entities replaces AAS 25 Financial Reporting by Superannuation Plans.
AASB 25 was issued in the early 1990s to address the financial reporting issues that superannuation
entities were dealing with at the time. AASB 1056 updates the requirements in the light of recent
significant developments in the superannuation industry and the adoption of IFRS in Australia.
AASB 1056 applies to the large superannuation entities regulated by the Australian Prudential
Regulation Authority and to public sector superannuation entities. It does not apply to directorates and
territory authorities.
3.11 AASB 2010-7 Amendments to Australian Accounting Standards arising from AASB 9 (Appl. 1 Jan
2018)
Background
The release of AASB 9 Financial Instruments necessitates consequential amendments to the following
standards and interpretations:
AASB 1
AASB 3
AASB 4
AASB 5
AASB 7
AASB 101
AASB 102
AASB 108
AASB 112
AASB 118
AASB 120
AASB 121
AASB 127
AASB 128
AASB 131
AASB 132
AASB 136
AASB 137
AASB 139
AASB 1023
AASB 1038
Interpretation 2
First-time Adoption of Australian Accounting Standards;
Business Combinations;
Insurance Contracts;
Non-current Assets Held for Sale and Discontinued Operations;
Financial Instruments: Disclosures;
Presentation of Financial Statements;
Inventories;
Accounting Policies, Changes in Accounting Estimates and Errors;
Income Taxes;
Revenue;
Accounting for Government Grants and Disclosure of Government Assistance;
The Effect of Changes in Foreign Exchange Rates;
Consolidated and Separate Financial Statements;
Investments in Associates;
Interests in Joint Ventures;
Financial Instruments: Presentation;
Impairment of Assets;
Provisions, Contingent Liabilities and Contingent Assets;
Financial Instruments: Recognition and Measurement;
General Insurance Contracts;
Life Insurance Contracts;
Members’ Shares in Co-operative Entities and Similar Instruments;
11
ACT Accounting Policy —AASB Standards issued which are not yet effective
as at 30 June 2014
Interpretation 5
Interpretation 10
Interpretation 12
Interpretation 19
Interpretation 127
Rights to Interests arising from Decommissioning, Restoration and Environmental
Rehabilitation Funds;
Interim Financial Reporting and Impairment;
Service Concession Arrangements;
Extinguishing Financial Liabilities with Equity Instruments; and
Evaluating the Substance of Transactions Involving the Legal Form of a Lease.
Changes
This standard was originally produced under the title of AASB 2009-11 which incorporated changes
made by the introduction of AASB 9 up until December 2009, however, that standard has been
superseded by this standard (AASB 2010-7) which incorporates changes made by the introduction of
AASB 9 up until December 2010.
The most significant changes arising from AASB 2010-7 applicable to reporting periods commencing on
or after 1 January 2018 are those relating to AASB 7, AASB 101 and AASB 139.
AASB 7 Financial Instruments: Disclosures
 References to AASB 9 have been added to AASB 7.2-5; references have been made to the new
financial asset classifications and to AASB 9 in AASB 7.8 & 9 and references to the new classification
of financial assets and to AASB 9 have been added to AASB 7.20. Note that these changes relate to
the disclosure required and will not have a material financial impact on agencies.
 Additional disclosures are required for designated or derecognised investments in equity instruments
measured at fair value through other comprehensive income as per paragraph 11A & 11B.
 Prior reclassification disclosures in paragraph 12 & 12A have been replaced with new disclosures
which are required where an agency changes its business model for managing assets and as a result
reclassifies all affected financial assets (see AASB 7.12B and 12C). There are also new disclosure
requirements regarding the reclassification of financial assets in AASB 7.12D. As these changes are in
relation to disclosures, they will not result in any material financial impact on agencies.
 An additional disclosure is required (AASB 7.20A) showing an analysis of the gain or loss recognised in
the Operating Statement arising from derecognition of financial assets measured at amortised cost.
The disclosure shall also include the reasons for derecognising those financial assets. As this is a
disclosure it will not have a material financial impact on agencies.
 Fair value disclosures for investments in equity instruments, that do not have a quoted market price
in an active market, are now required. As this is a change in disclosure it will not have a material
financial impact on agencies (AASB 7.29).
 On initial application of AASB 9, a number of quantitative disclosures are required by AASB 7.44I and
there are also a number of qualitative disclosures required by AASB 7.44J. As these changes relate to
disclosure requirements, they will not have a material financial impact on agencies.
 Appendix A (Defined Terms) no longer provides the definitions in AASB 139 for:
o Available-for-sale financial assets;
o Financial assets at fair value through profit or loss;
12
ACT Accounting Policy —AASB Standards issued which are not yet effective
as at 30 June 2014
o Financial asset or liability held for trading;
o Held to maturity investments; and
o Loans and receivables.
These references have been deleted from AASB 139. However, a reference for ‘held for trading’ is
now included in AASB 139.
 Appendix B has some minor changes including:
o reference change to AASB 9.B1;
o removal of financial asset out of the requirements to disclose the measurement basis in
paragraph B5(a). However, further advice is now provided in B5(aa) in regards to financial
assets;
o change in terminology from ‘loans and receivables’ to just ‘loans’ in paragraph B10 and ‘debt
instruments’ in paragraph B22; and
o changes have been made in paragraph B27 in terminology in regards to the instruments which
require separate sensitivity disclosure as per paragraph 40(a).
AASB 101 Presentation of Financial Statements
 Details of the components of other comprehensive income (paragraph 7) now includes gains and
losses from investments in equity instruments measured at fair value through other comprehensive
income in accordance with AASB 9 5.4.4.

The operating statement shall now include additional line items which detail the gains and losses
arising from:
o the derecognition of financial assets measured at amortised cost (paragraph 82(aa)); and
o the difference between the carrying amount and fair value of financial assets reclassified from
amortised cost to fair value (paragraph 82(ca)).

Changes have been made to AASB 101.68, 93 and 95 to reflect the new classifications of financial
assets.
AASB 139 Financial Instruments: Recognition and Measurement
 In AASB 139.1 the principles for classifying and measuring financial assets, have been removed from
the objective of the standard. These principles are now contained within AASB 9.

References to the new standard AASB 9 Financial Instruments are made in AASB 139.31, 33, 48, 57,
90, 96, AG3, AG3A, AG4B, AG4D, AG34, AG35 and AG76A.

The definitions for the categories of financial instruments have been aligned with the new
classifications of financial assets, as required by AASB 9, and the definitions for ‘held-to-maturity
investments’, ‘loans and receivables’ and ‘available-for-sale financial assets’ have been deleted;
references to a particular category of financial asset have been changed to refer to financial assets
13
ACT Accounting Policy —AASB Standards issued which are not yet effective
as at 30 June 2014
and AASB 9 now deals with financial assets and therefore references to financial assets have been
removed from AASB 139.

An embedded derivative shall be separated from the host contract and accounted for under AASB
139 if, amongst other criteria, it is not within the scope of AASB 9 as per AASB 139.11 and 11A.

When derecognising financial assets in their entirety, the difference between the asset’s carrying
amount, at the date of derecognition, and the consideration received shall be recognised in profit or
loss. Previously, the standard didn’t stipulate that the carrying amount was measured at the date of
derecognition and the consideration received also included cumulative gains or losses allocated to it
which had been recognised in other comprehensive income (AASB 139.26 & 27).

When derecognising parts of financial assets, where the entity maintains continuing involvement in
the asset, the difference between the asset’s carrying amount, at the date of derecognition, and the
consideration received shall be recognised in profit or loss. Previously, the standard didn’t stipulate
that the carrying amount was measured at the date of derecognition and the consideration received
also included cumulative gains or losses allocated to it which had been recognised in other
comprehensive income (AASB 139.33 & 34).

The reclassification of financial instruments requirements in AASB 139.50, 50A, 53 & 54 have been
limited to financial liabilities. Reclassifications for financial assets are now treated in accordance
with AASB 9.

The following paragraphs and their content have been deleted:
o 45 - 46 regarding subsequent measurement of financial assets;
o 50B - 52 regarding reclassification of financial assets;
o 61 regarding objective evidence of impairment;
o 66-70 regarding financial assets carried at cost and available for sale financial assets; and
o 79 with regard to the guidance on held-to-maturity investments.

Guidance relating to the treatment of estimates of cash receipts in instances where financial assets
have been reclassified, in regard to the effective interest rate, appearing in AASB 139.AG8 has been
deleted.

The reliable measure for determining fair value in paragraphs 53 & 54 now only applies to financial
liabilities and not financial assets.

Impairment and uncollectibility of financial assets referred to in paragraphs 58 and AG84 now only
applies to financial assets measured at amortised cost.

Upon initial application of AASB 9 agencies may:
o designate a financial liability as measured at fair value through profit or loss; and
o revoke any previous designations of a financial liability measured at fair value through profit or
loss if it does or doesn’t satisfy the condition at the date of initial application of AASB 9 (see
AASB 139.103M).
14
ACT Accounting Policy —AASB Standards issued which are not yet effective
as at 30 June 2014

Two examples of when an entity manages a group of financial assets and liabilities in accordance
with a documented risk management or investment strategy have been deleted from AASB 139.AG4I
and two examples provided in AASB 139.AG4E have been deleted and reference to financial assets
classified as available-for-sale has been removed.

Application guidance regarding the valuation of investments in equity instruments that do not have
a quoted market price in an active market has been removed from AASB 139.AG80, AG81, and AG96.

Application guidance regarding the treatment of monetary and non-monetary available-for-sale
financial assets in foreign currency has been removed from AASB 139.AG83. The paragraph now
only refers to financial liabilities in such instances.

An example has been removed from AASB 139.AG114(a).

A new heading above paragraph AG133 has been included which details the references for the
paragraphs concerning the effective dates and transition provisions for financial assets and financial
liabilities (AASB 139.103-108C).
See the discussion under AASB 9 Financial Instruments for the applicability of that standard to agencies.
3.12 AASB 2011-7 Amendments to Australian Accounting Standards arising from the Consolidation
and Joint Arrangements Standards (Appl. 1 Jan 2014 for not-for-profit entities)
Background
AASB 2011-7 gives effect to many consequential changes arising from the release of the new
consolidation and joint arrangements standards. For example, references to AASB 127 Consolidated and
Separate Financial Statements are amended to AASB 10 Consolidated Financial Statements or AASB 127
Separate Financial Statements, and references to AASB 131 Interests in Joint Ventures are deleted as
that Standard has been superseded by AASB 11 Joint Arrangements and AASB 128 Investments in
Associates and Joint Ventures (August 2011).
This Standard is applied when AASB 10 Consolidated Financial Statements, AASB 11 Joint Arrangements,
AASB 12 Disclosure of Interests in Other Entities, AASB 127 Separate Financial Statements and AASB 128
Investments in Associates and Joint Ventures are applied. This Standard applies to both for-profit and
not-for-profit entities with the different application dates of 1 January 2013 for for-profit agencies and 1
January 2014 for not-for-profit agencies as set out in AASB 2012-10 Amendments to Australian
Accounting Standards – Transition Guidance and Other Amendments.
As the consolidation and joint arrangements standards are not generally relevant to directorates and
territory authorities this standard will not apply to them. As a result, details of what AASB 2011-7
contains have not been presented in this paper.
3.13 AASB 2012-3 Amendments to Australian Accounting Standards – Offsetting Financial Assets and
Financial Liabilities (Appl. 1 Jan 2014)
Background
15
ACT Accounting Policy —AASB Standards issued which are not yet effective
as at 30 June 2014
AASB 2012-3 adds application guidance to AASB 132 Financial Instruments: Presentation to address
inconsistencies that have been identified in applying some of the offsetting criteria of AASB 132. This
includes clarifying the meaning of “currently has a legally enforceable right to set-off recognised
amounts” and “intends either to settle on a net basis, or to realise the asset and settle the liability
simultaneously”.
These amendments will only affect disclosure where directorates and territory authorities have financial
instruments that are set-off in accordance with AASB 132.42.
3.14 AASB 2013-1 Amendments to AASB 1049- Relocation of Budgetary Reporting Requirements
(Appl. 1 July 2014)
Background
The objective of this standard is to make amendments to AASB 1049 Whole of Government and General
Government Sector Financial Reporting, to remove the requirements relating to the disclosure of
budgetary information specified in that Standard for whole of Governments and General Government
Sectors (GGSs), as a consequence of the release of AASB 1055 Budgetary Reporting.
AASB 1049 applies to each government's whole of government general purpose statements and GGS
financial statements. It does not apply to directorates and territory authorities - AASB 1055 Budgetary
Reporting does apply to directorates and territory authorities.
3.15 AASB 2013-3 Amendments to AASB 136 – Recoverable Amount Disclosures for Non – Financial
Assets (Appl. 1 Jan 2014)
Background
AASB 2013-3 amends the disclosure requirements in AASB 136 Impairment of Assets. The amendments
include the requirement to disclose additional information about the fair value measurement when the
recoverable amount of impaired assets is based on fair value less costs of disposal. In addition, a further
requirement has been included to disclose the discount rates that have been used in the current and
previous measurements if the recoverable amount of impaired assets based on fair value less costs of
disposal was measured using a present value technique.
The amendments will impact disclosure for directorates and territory authorities when they recognise or
reverse an impairment loss on non-financial assets.
16
ACT Accounting Policy —AASB Standards issued which are not yet effective
as at 30 June 2014
3.16 AASB 2013-4 Amendments to Australian Accounting Standards – Novation of Derivatives and
Continuation of Hedge Accounting (Appl. 1 Jan 2014)
Background
AASB 2013-4 amends AASB 139 Financial Instruments: Recognition and Measurement to permit the
continuation of hedge accounting in circumstances where a derivative, which has been designated as a
hedging instrument, is novated from one counterparty to a central counterparty as a consequence of
laws or regulations.
As directorates and territory authorities are normally not involved with hedge accounting or derivatives
this amending standard will not apply to them.
3.17 AASB 2013-5 Amendments to Australian Accounting Standards – Investment Entities (Appl. 1 Jan
2014)
Background
An investment entity’s business purpose is to invest funds solely for the returns from capital
appreciation, investment income or both. The amendments arising from AASB 2013-5 Amendments to
Australian Accounting Standards – Investment Entities define an investment entity and require that,
with limited exceptions, an investment entity not consolidate its subsidiaries or apply AASB 3 Business
Combinations when it obtains control of another entity. These amendments require an investment
entity to measure unconsolidated subsidiaries at fair value through profit or loss in accordance with
AASB 9 Financial Instruments in its consolidated and separate financial statements.
The amendments also introduce new disclosure requirements for investment entities into AASB 12
Disclosure of Interests in Other Entities and AASB 127 Separate Financial Statements.
If an entity applies these amendments but does not apply AASB 9, any reference in this standard to
AASB 9 is read as reference to AASB 139 Financial Instruments: Recognition and Measurement.
As directorates and territory authorities normally do not have investment entities this amending
standard does not apply to them.
17
ACT Accounting Policy —AASB Standards issued which are not yet effective
as at 30 June 2014
3.18 AASB 2013-6 Amendments to AASB 136 arising from Reduced Disclosure Requirements (Appl. 1
Jan 2014)
Background
AASB 2013-6 Amendments to AASB 136 arising from Reduced Disclosure Requirements applies reduced
disclosure principles to the changes made to AASB 136 Impairment of Assets by AASB 2013-3
Recoverable Amount Disclosures for Non-Financial Assets (see above).
It is ACT Disclosure Policy that agencies that are consolidated into the whole of Government financial
statements will not be allowed to adopt the reduced disclosure regime.
3.19 AASB 2013-7 Amendments to AASB 1038 arising from AASB 10 in relation to Consolidation and
Interests of Policyholders (Appl. 1 Jan 2014)
Background
This standard removes the specific consolidation requirements from AASB 1038 Life Insurance Contracts,
and thus leaves AASB 10 Consolidated Financial Statements as the sole source for consolidation
applicable to life insurer entities.
This Standard does not apply to directorates and territory authorities as they do not issue life insurance
contracts nor are they a parent of a group that includes a life insurer.
3.20 AASB 2013-8 Amendments to Australian Accounting Standards – Australian Implementation
Guidance for Not-for-Profit Entities – Control and Structured Entities (Appl. 1 Jan 2014)
Background
AASB 2013-8 Amendments to Australian Accounting Standards – Australian Implementation Guidance
for Not-for-Profit Entities – Control and Structured Entities adds Appendix E Australian Implementation
Guidance to AASB 10. The new appendix does not apply to for profit entities or affect their application
of AASB 10. The guidance explains the various principles in AASB 10 regarding the criteria for
determining whether a not-for-profit entity controls another entity and illustrates the principles with
examples. Appendix E covers aspects of the three criteria set out in AASB 10.7 for control of an investee
by an investor (i.e. power over the investee, returns to the investor and the link between power and
returns). It explains that the basic terms ‘investor’ and ‘investee’ in AASB 10 refer to entities that have a
relationship in which control of one entity (the investee) by the other (the investor) might arise. The
guidance also addresses protective and substantive rights and the relevance of non-financial returns in
applying the control criteria. A range of comprehensive examples are also included to illustrate the
principles.
18
ACT Accounting Policy —AASB Standards issued which are not yet effective
as at 30 June 2014
In respect of AASB 12 Disclosure of Interests in Other Entities the implementation guidance explains the
application of the AASB 12 definition of ‘structured entity’ by not-for-profit entities. This affects the
disclosures that a not-for-profit entity would have to make in its general purpose financial statements to
meet the requirements of AASB 12.
Resulting from this additional guidance, agencies will need to reassess the nature of their relationship
with other entities, including entities that are not currently consolidated.
As directorates and territory authorities do not generally have interests in other entities this amending
standard is unlikely to be relevant to them.
3.21 AASB 2013-9 Amendments to Australian Accounting Standards – Conceptual Framework,
Materiality and Financial Instruments (Part B Materiality Appl. 1 Jan 2014 and Part C Financial
Instruments Appl. 1 Jan 2015)
Part B Materiality
As AASB 1031 Materiality is being withdrawn AASB 2013-9 Part B reflects the AASB progressively
removing references to AASB 1031 in all standards and interpretations.
Part C Financial Instruments
The main amendments regarding financial instruments are as follows:

to add Chapter 6 Hedge Accounting and make consequential amendments to AASB 9 Financial
Instruments and numerous other standards;

to permit requirements relating to the ‘own credit risk’ of financial liabilities measured at fair value
to be applied without applying any other requirements of AASB 9 at the same time;

to amend the mandatory application date of AASB 9 so that AASB 9 is required to be applied for
annual reporting periods beginning on or after 1 January 2017 instead of 1 January 2015 (note that
AASB 2014-1 Amendments to Australian Accounting Standards Part E amended the application
date of AASB 9 to 1 January 2018); and

to add or amend the Australian Accounting Standards – Reduced Disclosure Requirements for AASB
7 Financial Instruments: Disclosures and AASB 101 Presentation of Financial Statements. AASB 1053
Application of Tiers of Australian Accounting Standards provides further information regarding the
differential reporting framework and the two tiers of reporting requirements for general purpose
financial statements.
ACT directorates and territory authorities do not engage in hedging of financial instruments and these
amendments will not apply to them. It is ACT Disclosure Policy that agencies that are consolidated into
the whole of Government financial statements will not be allowed to adopt the reduced disclosure
regime.
19
ACT Accounting Policy —AASB Standards issued which are not yet effective
as at 30 June 2014
See the discussion under AASB 9 Financial Instruments for the applicability of that standard to agencies.
3.22 AASB 2014-1 Amendments to Australian Accounting Standards (Part A Annual Improvements
2010-2012 and 2011-2013 Cycles (Appl. 1 Jan 2014), Part B Defined Benefit Plans: Employee
Contributions (amendments to AASB 119) (Appl. 1 July 2014); Part C – Materiality (Appl. 1 July
2014); Part D – Consequential Amendments arising from AASB 14 Regulatory Deferral Accounts
(Appl. 1 Jan 2016); and Part E – Financial Instruments (Appl. 1 Jan 2015 except paragraphs 64-72
(Appl. 1 Jan 2017 and paragraphs 73-107 (Appl. 1 Jan 2018)
AASB 2014-1 Amendments to Australian Accounting Standards is an omnibus amending standard
comprising five distinct parts.
Part A - Annual Improvements 2010-12 and 2011-13 Cycles
Part A makes amendments to various Australian Accounting Standards in response to the IASB’s release
of its Annual Improvements to IFRSs 2010-12 Cycle and Annual Improvements to IFRSs 2011-13 Cycle
standards in December 2013. These amendments include:

Clarifying share-based payment vesting and non-vesting conditions.

Disclosures on the aggregation of operating segments - requiring the disclosure of judgements made
by management in applying the aggregation criteria including a brief description of the operating
segments that have been aggregated and the economic indicators that have been assessed in
determining that the operating segments share similar economic characteristics. In addition there is
clarification that a reconciliation of the total of the reportable segments’ assets to the entity’s assets
is required only if this information is regularly provided to the entity’s chief operating decision
maker. This change aligns the disclosure requirements with those for segment liabilities.

Clarification that short term receivables and payables that have no stated interest rate can be
measured at their invoiced amounts without discounting if the effect of discounting is not material.

Clarification of the requirements of the revaluation model in AASB 16 Property, Plant and Equipment
and AASB 138 Intangible Assets recognising that the restatement of accumulated depreciation
(amortisation) is not always proportionate to the change in the gross carrying amount of the asset.

Extension of the ‘definition of related party’.

Clarifying the interrelationship between business combinations and investment property when
classifying property as investment property or owner-occupied.
These amendments are expected to have a minimal impact on directorates and territory authorities.
PART B – Defined Benefit Plans: Employee Contributions (Amendments to AASB 119)
Part B makes amendments to AASB 119 Employee Benefits to incorporate the IASB’s practical expedient
amendments finalised in International Financial Reporting Standard Defined Benefit Plans: Employee
20
ACT Accounting Policy —AASB Standards issued which are not yet effective
as at 30 June 2014
Contributions (Amendments to IAS 19) in relation to the requirements for contributions from employees
or third parties that are linked to service.
The amendments clarify that if the amount of the contributions is independent of the number of years
of service, an entity is permitted to recognise such contributions as a reduction in the service cost in the
period in which the related service is rendered, instead of attributing the contributions to the periods of
service. In contrast, if the amount of the contributions is dependent on the number of years of service,
an entity is required to attribute those contributions to periods of service using the same attribution
method required by paragraph 70 of AASB 119 for the gross benefit.
As ACT directorates and territory authorities do not run defined benefit plans then Part B of
AASB 2014 – 1 does not apply to them. The impact on the Superannuation Provision Account is yet to
be determined.
Part C Materiality
Part C makes amendments to particular Australian Accounting Standards to delete their references to
AASB 1031 Materiality, which historically has been referenced in each Australian Accounting Standard.
The AASB is making these amendments as and when each Standard is also being amended for another
purpose. Specific references to AASB 1031 have already been deleted from some Australian Accounting
Standards following the release of AASB 2013-9 Amendments to Australian Accounting Standards –
Conceptual Framework, Materiality and Financial Instruments in December 2013.
Part D Consequential Amendments arising from AASB 14 Regulatory Deferral Accounts
Part D of AASB 2014-1 makes amendments to AASB 1 First-time Adoption of Australian Accounting
Standards, which arise from the release of AASB 14 Regulatory Deferral Accounts in June 2014. AASB 14
permits first-time adopters to continue to account for amounts related to rate regulation in accordance
with their previous GAAP when they adopt Australian Accounting Standards. However, to enhance
comparability with entities that already apply Australian Accounting Standards and do not recognise
such amounts, AASB 14 requires that the effect of rate regulation must be presented separately from
other items. An entity that is not a first-time adopter of Australian Accounting Standards will not be able
to apply AASB 14.
As ACT directorates and territory authorities have already adopted IFRS and are not generally involved
in rate regulated activities Part D of AASB 2014-1 will not apply to them.
Part E – Financial Instruments
Part E makes amendments to Australian Accounting Standards to reflect the AASB’s decision to defer
the mandatory application date of AASB 9 Financial Instruments to annual reporting periods beginning
on or after 1 January 2018. Part E also makes amendments to numerous Australian Accounting
Standards as a consequence of the introduction of Chapter 6 Hedge Accounting into AASB 9 Financial
21
ACT Accounting Policy —AASB Standards issued which are not yet effective
as at 30 June 2014
Instruments and to amend reduced disclosure requirements for AASB 7 Financial Instruments:
Disclosures and AASB 101 Presentation of Financial Statements.
These consequential amendments and changes to reduced disclosure requirements include
amendments that had been made by Part C of AASB 2013-9, but which needed to be remade in order to
be effective, in view of procedural issues with repealed Accounting Standards.
Part E is applicable to annual reporting periods beginning on or after 1 January 2015, with some
amendments only becoming mandatorily applicable from a later date. Early application is permitted,
subject to certain conditions. If an entity applies AASB 9 as amended by AASB 2013-9 to an annual
reporting period beginning before 1 January 2015, Part E shall also be applied to that earlier period.
See the discussion under AASB 9 Financial Instruments for the applicability of that standard to agencies.
3.23 AASB 2014-2 Amendments to AASB 1053 – Transition to and between Tiers, and related Tier 2
Disclosure Requirements (Appl. 1 Jan 2014)
Background
AASB 1053 Application of Tiers of Australian Accounting Standards was released by the AASB in order to
help reduce the disclosure burden for some reporting entities. Entities, which are now referred to as
Tier 2 entities, include proprietary companies (those without public accountability) in the for-profit
private sector, all not-for-profit private sector entities and the majority of public sector entities. Tier 2
entities are now able to apply AASB 1053 and report using either full Australian Accounting Standards or
the reduced disclosure requirements.
However, entities that possess public accountability in the for-profit sector, and the Australian
Government, State Government and Local Governments, both whole-of-government and GGS financial
statements, must be prepared using full Australian Accounting Standards.
AASB 2014-2 makes amendments to AASB 1053 to:

clarify that AASB 1053 relates only to general purpose financial statements;

make AASB 1053 consistent with the availability of the AASB 108 Accounting Policies, Changes in
Accounting Estimates and Errors option in AASB 1 First-time Adoption of Australian Accounting
Standards;

clarify certain circumstances in which an entity applying Tier 2 reporting requirements can apply
the AASB 108 option in AASB 1;

permit an entity applying Tier 2 reporting requirements for the first time to do so directly using
the requirements in AASB 108 (rather than applying AASB 1) when, and only when, the entity
had not applied, or only selectively applied, applicable recognition and measurement
requirements in its most recent previous annual special purpose financial statements; and
22
ACT Accounting Policy —AASB Standards issued which are not yet effective
as at 30 June 2014

specify certain disclosure requirements when an entity resumes the application of Tier 2
reporting requirements.
It is ACT Disclosure Policy that agencies that are consolidated into the whole of Government financial
statements will not be allowed to adopt the reduced disclosure regime. As a result, further details of
what AASB 2014-2 contains have not been presented in this paper.
3.24 AASB Interpretation 21 Levies (Appl. 1 Jan 2014)
Background
AASB Interpretation 21 clarifies the circumstances under which a liability imposed by a government on
an entity to pay a levy should be recognised by that entity, and whether that liability should be
recognised in full at a specific date, or progressively over a period of time. It addresses the accounting
for an entity’s liability to pay a levy if that liability falls within the scope of AASB 137 Provisions,
Contingent Liabilities and Contingent Assets. It also addresses the accounting for a liability to pay a levy
where the timing and amount is certain.
For the purposes of this Interpretation, a levy is an outflow of resources embodying economic benefits
that is imposed by governments on entities in accordance with legislation (i.e. laws and/or regulations
other than:

those outflows of resources that are within the scope of other Standards (such as income taxes
that are within the scope of AASB 112 Income Taxes); and

fines or other penalties that are imposed for breaches of the legislation.
Government in this Interpretation refers to government, government agencies, and similar agencies
whether local, national or international.
This Interpretation applies to private sector entities paying a levy triggered on a calculation basis such as
gross amounts of revenue. It would not apply to directorates and territory authorities.
23
ACT Accounting Policy —AASB Standards issued which are not yet effective
as at 30 June 2014
ATTACHMENT A
Background
Attached is a copy of the ‘Impact of Accounting Standards Issued but yet to be Applied’ disclosure as
required by directorates and territory authorities for inclusion in their 2013-14 financial statements.
However, the list of standards needs to be tailored by including only those standards applicable to the
agency.
Please note that the standards and interpretations below are applicable to ‘Example Agency’. Standards
appearing in red, were not included in the 2013-14 Model Financial Statements but have been added to
this Note 2(af) disclosure, whereas standards appearing in brown have been removed. A complete list
of standards for the consideration of each agency can be found by combining the list below and the list
located within the green commentary section. Each standard and interpretation mentioned below, and
as appearing in the green commentary section, is discussed in this paper.
AASB 101.10(e)
NOTE 2.
(af)
AASB 108.30 & 31
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Impact of Accounting Standards Issued but yet to be Applied
The following new and revised accounting standards and interpretations have been issued by the
Australian Accounting Standards Board but do not apply to the current reporting period. These
standards and interpretations are applicable to future reporting periods. ‘Example Agency’ does not
intend to adopt these standards and interpretations early. Where applicable, these Australian
Accounting Standards will be adopted from their application date. It is estimated that the effect of
adopting the below pronouncements, when applicable, will have no material financial impact on
‘Example Agency’ in future reporting periods:

AASB 9 Financial Instruments (application date 1 Jan 2017);

AASB 10 Consolidated Financial Statements (application date 1 Jan 2014 for not-for-profit entities);

AASB 11 Joint Arrangements (application date 1 Jan 2014 for not-for-profit entities);

AASB 12 Disclosure of Interests in Other Entities (application date 1 Jan 2014 for not-for-profit
entities);

AASB 127 Separate Financial Statements (application date 1 Jan 2014 for not-for-profit entities);

AASB 128 Investments in Associates and Joint Ventures (application date 1 Jan 2014 for not-for
profit entities);

AASB 1031 Materiality (application date 1 Jan 2014);

AASB 1055 Budgetary Reporting (application date 1 July 2014);

AASB 2010-7 Amendments to Australian Accounting Standards arising from AASB 9 (December
2010) [AASB 1, 3, 4, 5, 7, 101, 102, 108, 112, 118, 120, 121, 127, 128, 131, 132, 136, 137, 139, 1023
& 1038 and Interpretations 2, 5, 10, 12, 19 & 127] (application date 1 Jan 2018);

AASB 2011-7 Amendments to Australian Accounting Standards arising from the Consolidation and
Joint Arrangements Standards [AASB 1, 2, 3, 5, 7, 9, 2009-11, 101, 107, 112, 118, 121, 124, 132,
133, 136, 138, 139, 1023 & 1038 and Interpretations 5, 9, 16 & 17] (application date 1 Jan 2014 for
not -for profit entities);
24
ACT Accounting Policy —AASB Standards issued which are not yet effective
as at 30 June 2014

AASB 2012-3 Amendments to Australian Accounting Standards – Offsetting Financial Assets and
Financial Liabilities [AASB 132] (application date 1 Jan 2014);

AASB 2013-3 Amendments to AASB 136 – Recoverable Amount Disclosures for Non–Financial
Assets (application date 1 Jan 2014)

AASB 2013-8 Amendments to Australian Accounting Standards – Australian Implementation
Guidance for Not-for-Profit Entities Control and Structured Entities [AASB 10, AASB 12 & AASB
1049] (application date 1 Jan 2014)

AASB 2013-9 Amendments to Australian Accounting Standards – Conceptual Framework,
Materiality and Financial Instruments Part B Materiality [AASB 1, 3, 4, 5, 7, 9 (December 2009), 9
(December 2010), 101, 102, 108, 112, 118, 120, 121, 132, 134, 136, 137, 139, 1023, 1038, 1049,
1050, 1051, 1052, 1055, AAS 25, Interpretation 1, 2, 4, 5, 6, 7, 9, 10, 12, 1, 14, 15, 16, 17, 18, 19, 20,
21, 107, 110, 115, 125, 127, 129, 131, 132, 1003, 1019, 1030, 1031, 1038 & 1042] (application date
1 Jan 2014); Part C Financial Instruments [AASB 9 December (2009); 2009-11 AASB 9 (December
2010) & 2010-7] (application date 1 Jan 2015); and

AASB 2014 -1 Amendments to Australian Accounting Standards Part A: Annual Improvements
2010-2012 and 2011-2013 Cycles [AASB 2, 3, 8, 9 (December 2009), 9 (December 2010), 13, 116,
119, 124, 137, 138, 139, 140; 1052 & Interpretation 129] (application date 1 July 2014); Part C
Materiality (application date 1 July 2014); and Part E Financial Instruments [AASB 1,3, 4, 5, 7, 9
(December 2009 9 (December 2010), 101, 102, 108, 112, 118, 120, 121, 132, 136, 137, 137, 139,
Interpretation 2, 5, 10, 12, 16, 19 and 107] (application date 1 January 2015 except paragraphs 6472 (applicable 1 Jan 2017) and paragraphs 73-107 (applicable 1 Jan 2018).
Commentary – Note 2: Summary of Significant Accounting Policies
Impact of Accounting Standards Issued but Yet to be Applied
The Model does not contain a complete list of standards issued but not yet applicable. Instead it contains
those standards not yet applicable which will apply to most agencies (as at March 2014). This is because
agencies do not have to include standards that would never apply to them (e.g. AASB 129 Financial
Reporting in Hyperinflationary Economies) in their Note 2(af) disclosure. As such, most agencies will be
able to simply use the list contained in the model note, however, additional standards may be issued
(which are applicable) between April and the end of June and therefore further standards may need to be
included in Note 2(af). The Accounting Branch will issue an updated Note 2(af) disclosure in July to assist
agencies in picking up additional standards issued in their Note 2(af) disclosure. Agencies need to assess
each new and amended standard issued but not yet applicable and disclose if their adoption is likely to
have a significant impact. Further guidance on this will be included in the Accounting Policy on Treatment
of AASB Standards issued which are not yet effective as at 30 June 2014 to be issued in July 2014.
Agencies should review this policy in assessing the impact of standards that have been released but are
not yet effective as at 30 June 2014 for disclosure in their 2013-14 financial statements.
For the information of agencies, the additional standards issued but not yet applicable (as at 30 June
2014) which are not included in the Note 2(af) disclosures in the Model are:
Reference
Commentary – Note 2: Summary of Significant Accounting Policies - Continued

AASB 14 Regulatory Deferral Accounts (application date 1 Jan 2016)

AASB 1056 Superannuation Entities (application date 1 July 2016);

AASB 2013-1 Amendments to AASB 1049- Relocation of Budgetary Reporting Requirements
(application date 1 July 2014)
AASB 2013-4 Amendments to Australian Accounting Standards – Novation of Derivatives and
Continuation of Hedge Accounting [AASB 139] (application date 1 Jan 2014)

25
ACT Accounting Policy —AASB Standards issued which are not yet effective
as at 30 June 2014






AASB 2013-5 Amendments to Australian Accounting Standards – Investment Entities [AASB 1,
AASB 3, AASB 7, AASB 10, AASB 107, AASB 112, AASB 124, AASB 127, AASB 132, AASB 134 & AAB
139] (application date 1 Jan 2014);
AASB 2013-6 Amendments to AASB 136 arising from Reduces Disclosure Requirements
(application date 1 Jan 2014);
AASB 2013-7 Amendments to AASB 1038 arising from AASB 10 in relation to Consolidation and
Interests of Policy Holders (application date 1 Jan 2014);
AASB 2014 -1 Amendments to Australian Accounting Standards Part B: Defined Benefit Plans:
Employee Contributions (Amendments to AASB 119 ) (application date 1 July 2014) and Part D
Consequential Amendments arising from AASB 14 Regulatory Deferral Accounts [AASB 1]
(application date 1 Jan 2016);
AASB 2014-2 Amendments to AASB 1053 Transition to and between Tiers, and related Tier 2
Disclosure Requirements (application date 1 July 2014) ; and
AASB Interpretation 21 Levies (application date 1 Jan 2014)
Note, it is recommended that agencies review the above standards to ensure they do not apply to that
agency.
26