Can the reporting entity concept be resurrected?
The AASB’s discussion at the May meeting offers an intriguing possibility: the introduction of a ‘third tier’ of financial reporting, perhaps without the ‘second tier’ of IFRS for SMEs. In other words, everyone could follow the recognition and measurement requirements of IFRS, but the disclosures would reduced, perhaps using the disclosure simplification of the IFRS for SME as a guide (as is relevant). This would effectively be the reporting entity concept by a different name, although probably with more disclosure than currently occurs. Entities following this approach could not claim compliance with IFRS, but this is effectively the case with special purpose financial reports today in any case. Before the AASB can proceed to this sort of outcome, there are a number of factors that would need to be considered, including: • How the disclosures required would be determined and indicated – i.e. principle-based or ‘line by line’ • Whether an IFRS for SME is required for global non-publicl
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