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The Australian Accounting Standards Board (AASB) at its 21 November 2019 meeting made a decision to defer the application of AASB 15 ‘Revenue from Contracts with Customers’ and AASB 1058 ‘Income of Not-for-Profit Entities’ by not-for-profit entities to research grants.

AASB 15 and AASB 1058 are now applicable, for the accounting of research grants, for periods beginning on or after 1 July 2019, rather than for periods beginning on or after 1 January 2019. Early application is permitted. The Board advised their decision to do so is to address divergent views on the recognition of revenue applying to research grants.

Notwithstanding the decision to defer, the Board agreed to proceed with the amendments to the illustrative examples (Examples 4A and 4B) proposed in the Fatal-Flaw Review draft and to include a new example (Example 4D) to provide additional guidance for entities to implement AASB 15 for research grants. The revised version of the amending standard will be voted by Board members out of session.

In December 2018, the Australian Auditing and Assurance Standards Board (AUASB) released a revised ASA 540 ‘Auditing Accounting Estimates and Related Disclosures’ that came into effect for financial reporting periods beginning on or after 15 December 2019, with early adoption permitted.

The International Standard on Auditing (ISA) 540 (Revised) Implementation Working Group recently prepared an audit client briefing Considerations for Management When Determining Accounting Estimates and Related Disclosures for chief financial officers, other senior management responsible for financial statement preparation and staff directly involved in determining accounting estimates.

The briefing provides an overview of:

• management’s responsibilities in determining when accounting estimates are needed
• management’s responsibilities regarding the main components of an estimation process
• the impact on management because of changes to the auditor’s responsibilities, including broad questions auditors may ask those involved in the detailed aspects of the estimation process.

This briefing is not meant to be exhaustive, however it may be a helpful resource for preparers of financial statements when determining and evaluating accounting estimates and related disclosures.

The Australian Accounting Standards Board (AASB) has recently issued AASB 2019-02 ‘Amendments to Australian Accounting Standards – Implementation of AASB 1059’.

This Standard AASB 1059 ‘Service Concession Arrangement: Grantors’ to:

• change the modified retrospective approach set out in paragraph C4 to:
  • specify the financial liability should be recognised at fair value at the date of initial application
  • amend the method for measuring the liability under the Grant of a Right to the Operator (GORTO) model
  • specify the method for measuring the liability where the operator has provided additional consideration for access to an existing asset of the grantor
• make editorial amendments to the accompanying application and implementation guidance.

This Standard also amends AASB 16 ‘Leases’ to provide a practical expedient to grantors of service concession arrangements so that AASB 16 would not need to be applied to assets that would be recognised as service concession assets under AASB 1059.

The amending Standard applies to annual periods beginning on or after 1 January 2020, with earlier application permitted.

TD 19-02 ‘Mandatory Early Close as at 31 March each year’ (TD 19-02)

NSW Treasury recently released TD 19-02 to effect mandatory early close procedures for agencies listed in Appendix A and the accountable authorities for those agencies reporting under the Government Sector Finance Act 2018. The TD should be read in conjunction with the below TPP 19-08 ‘Agency Direction for the 2019-20 Mandatory Early Close’.

TPP 19-08 ‘Agency Guidelines for the 2019-20 Mandatory Early Close’ (TPP 19-08)

NSW Treasury recently released TPP 19-08 mandating the early close procedures NSW public sector agencies listed in Appendix A of TD 19-02 must complete.

Agencies are required to:

• perform each early close procedure listed in Appendix B as at 31 March 2020
• provide the results of their early close procedures to the Audit Office and Treasury no later than 1 May 2020
• report emerging issues which have the potential to materially affect either the year -end financial statement or the agency year-end process at three points during the year – 13 February, 1 May and 22 June 2020.

NSW Treasury recently updated TC 19-07 ‘AASB 15 Revenue from contracts with customers and AASB 1058 Income of Not-for-Profit Entities Transition Elections’, first released in June 2019.

The revised circular now mandates the modified retrospective option for not-for-profit agencies on initial application of AASB 15 and AASB 1058, as prescribed in AASB 15.C3(b) and AASB 1058.C3(b).

As a result, agencies will now apply AASB 15 and AASB 1058 retrospectively with the cumulative effect of initially applying AASB 15 and AASB 1058 recognised at the date of initial application. For 30 June year ends, this means the comparatives for the year ended 30 June 2019 (for not-for-profit entities) will not be restated.

Further transition elections under the modified retrospective approach include:

Several other optional or mandated practical expedients remain as issued in the original circular.

NSW Treasury recently issued TPP 19-06 ‘AASB 1059 Service Concession Arrangements: Grantors – Scoping’, to provide guidance to NSW government agencies in applying the scoping requirements of AASB 1059 ‘Service Concession Arrangements: Grantors’.

The guidance expands on and discusses key terminology and provides a step-by-step approach to help agencies:

• identify service concession assets
• determine whether an asset provides a public service
• determine whether an operator is managing at least some of the public service at its own discretion
• determine whether the grantor controls or regulates what services the operator must provide with the asset, to whom it must provide them and at what price
• assess whether the grantor controls any significant residual interest in the asset at the end of the service concession arrangement term.

The Policy applies to all NSW public sector agencies (including State Owned Corporations). The Policy and AASB 1059 are both effective for financial periods commencing on or after 1 January 2020. NSW public sector agencies (including Statutory State-Owned Corporations), with 30 June year-ends, will first apply AASB 1059 the 2020-21 financial year.

NSW Treasury recently issued TPP 19-07 ‘Asset Management Policy for the NSW Public Sector’, which sets out the core management practices the NSW Government expects agencies to adopt to support their asset management processes with the objective of strengthening accountability, performance and capability across the NSW public sector.

The policy mandates NSW Government agencies adopt a whole-of-government and whole-of-asset lifecycle approach to their assets, through its core requirements:

• Core Requirement 1: Asset Management Principles
• Core Requirement 2: Asset Management Framework (the framework)
• Core Requirement 3: Policy compliance and disclosures.

The Policy applies to all budget material agencies (as listed in NSW Budget Paper No. 1), except for state-owned corporations and public financial corporations.

This Policy is effective from 31 October 2019 and supersedes TPP 13-03 ‘Total Asset Management Policy for the NSW Public Sector’ and the associated documents. All other existing policies relating to NSW Government assets management continue to apply.

NSW Treasury recently issued Frequently Asked Questions (FAQs) – AASB 16 Leases. These FAQs provide guidance to agencies on:

• whether the current lease incentive liability should be reversed out through the right-of-use asset (ROUA) balance or retained earnings on transition to AASB 16
• whether there are any exceptions to the Treasury mandated approach for calculating the ROUA on transition
• the discount rates to use when entering a lease once AASB 16 is effective
• whether ROUAs will be subsequently measured at cost or fair value
• how to account for make good provisions.

The Office of Local Government (OLG) recently issued Circular 19-27 ‘Extension of the rates path protection for new councils’.

The Circular advises councils of the following changes to the Ministerial Determination issued for section 218CB of the Local Government Act 1983:

• the rates path protection for new councils formed in 2016 has been extended to 2021
• several new councils that opted out of the rates path protection were removed from Schedule B
• all new councils are eligible to apply for a special variation or minimum rate variation, regardless of whether they have opted out of the rates path protection extension.

The Australian Securities and Investments Commission (ASIC) recently released 19-341MR Financial reporting focuses for 31 December 2019 announcing its focus areas for 31 December 2019 financial reports of listed entities and other entities of public interest with many stakeholders.

The key focus areas are:

• impact of the new lease and other standards
• impairment testing and asset values
• revenue recognition
• expense deferral
• off-balance sheet arrangements
• tax accounting
• disclosures on operating and financial review, non-IFRS financial information, and estimates and accounting policy judgements.

Topics discussed included:

AASB Meeting Highlights – 21 November 2019

• disclosure of compliance with recognition and measurement (R&M) in special purpose financial statements (SPFS) for not-for-profit private sector entities
• AASB 15 – deferral for entities with research grants and December year-end*
• fair value measurement for not-for-profit entities
• disclosure of the effect of new IFRS standards not yet issued in Australia
• ED 291 not-for-profit entity definition
• ED 297 removal of SPFS for certain for-profit-entities – feedback
• reduced disclosure requirements (RDR) disclosures for AASB 2019-3 interest rate benchmark reform
• project plans and work program.

Latest news, accounting standards and work-in-progress documents from the AASB included:

Topics discussed included:

IASB Meeting Highlights – 11-12 December 2019

• implementation matters
  • onerous contracts
  • annual improvements 2018-2020
• accounting policies and accounting estimates (amendments to IAS 8)
• financial instruments with characteristics of equity
• amendments to IFRS 17 ‘Insurance Contracts’
• IFRS 3 reference to the conceptual framework
• SME standard review and update
• IBOR reform and the effects on financial reporting
• subsidiaries that are SMEs
• business combinations under common control.

IASB Meeting Highlights – 19-20 November 2019

• primary financial statements
• subsidiaries that are SMEs
• disclosure Initiative
• IFRS 3 reference to the conceptual framework
• amendments to IFRS 17 ‘Insurance Contracts’
• implementation matters:
  • lack of exchangeability (IAS 21)
  • annual Improvements
  • cryptoassets.

IASB Meeting Highlights – 22-23 October 2019

• implementation matters:
  • property, plant and equipment – proceeds before intended use
  • onerous contracts – costs of fulfilling a contract
  • sale of a single asset entity containing real estate
  • September 2019 IFRIC Update
• business combinations under common control
• amendments to IFRS 17 ‘Insurance Contracts’
• IBOR reform and the effects on financial reporting
• financial instruments with characteristics of equity
• dynamic risk management
• SME standard review and update
• subsidiaries that are SMEs
• accounting policies and accounting estimates (amendments to IAS 8).

Latest news from the IFRS Foundation included:

Topics discussed included:

IPSASB Meeting Highlights – 10-13 December 2019

• revenue / transfer expenses – cross cutting issues
• revenue with performance obligations (ED 70)
• transfer expenses (ED 72)
• revenue without performance obligations (ED 71)
• leases (discussion of issues)
• public sector measurement (initial review of responses to ED 69)
• infrastructure (discussion of issues)
• revenue and transfer expenses – approval of exposure drafts
• heritage (discussion of issues).

Topics discussed included:

AUASB Meeting Highlights – 3-4 December 2019

• parliamentary inquiry into the regulation of auditing in australia
• GS 005 ‘Using the work of a Management’s Expert’
• updated 2019-2023 AUASB strategy
• AUASB technical work program – 2019-20 update
• ASRE 2410 ‘Review of a Financial Report Performed by the Auditor of the Entity’
• GS 008 ‘The Auditor’s Report on a Remuneration Report Under Section 300A of the Corporations Act 2001’
• IAASB matters.

Latest news from the AUASB included:

Topics discussed included:

IAASB Meeting Highlights – 9-13 December 2019

• ISA 600 (revised)
• Strategy and work plan
• ISRS 4400 (revised)
• Extended External Reporting (EER)
• Audits of Less Complex Entities
• ISQM 1
• ISQM 2 issues
• ISA 220 (revised).

IAASB Meeting Highlights (conference call) – 7 November 2019

• EER Assurance
• IESBA Code – Conforming Amendments.

Latest publications from the IAASB included:

Topics discussed included:

APESB Meeting Highlights – 20 November 2019

• proposed revisions to APESB pronouncements
• revision of technical staff Q&A on audit partner rotation
• update on Independence Guide project
• international and other activities
• update on the Parliamentary Inquiry on audit regulation in Australia
• proposed revisions of APES 230 ‘Financial Planning Services’ (CP 01/19).

Latest news and technical updates from the APESB included:

Topics discussed included:

IESBA Meeting Highlights – 3-6 December 2019

• fees
• definitions of listed entity and public interest entity (PIE)
• non-assurance services
• technology
• IAASB-IESBA coordination
• revised and restructured code roll-out
• emerging issues and outreach committee (EIOC)
• IFAC global status and adoption report
• role and mindset.

Latest publications from the IESBA included:

Treasury’s recent releases included:  

DPC's recent memos and circulars included:  

NSW Procurement Board’s recent Procurement alerts included:

Inquiries referred and Reports tabled in NSW Parliament included:

Inquiries referred and Reports tabled in NSW Parliament included:

Recent media releases included:

Recent IPART papers and reports included:

Recent news and publications included: