Question

List the key requirements of relevant legislation and regulations relevant to financial reporting

Answer 1

The key requirements of relevant legislation and regulations relevant to financial reporting are:

There are a range of different size thresholds, across different entity types, with inconsistent reporting and audit requirements. Differences in these thresholds and reporting requirements do not appear to be the result of different risk characteristics, or public interest in the accounts of entities.

Assurance requirements are similarly divergent between entity type:

Some reporting requirements may call for an audit or review by a Registered Company Auditor, others only an audit or review by a member of the Chartered Accountants ANZ, CPA Australia, or IPA.

It was often a complex task to draw out the relevant reporting requirements from legislation:

Sometimes, reporting requirements are outlined in regulations, and it is not always easy to get an overview of the different requirements that apply to different tiers of entities required to report.

Legislative reporting requirements may be internally inconsistent:

One instance was identified where legislation required GPFRs to be prepared, but prescribed reporting under a non-IFRS GAAP (Trade Unions whose income <$100,000). Here, the legislation refers to GPFRs, but did not require compliance with AASBs, and set out an alternative set of accounting principles. These principles permit accrual or cash basis accounting to be adopted.

Government reporting legislation on its own does not always require accounts to be prepared in accordance with the accounting standards: sometimes, it is the treasurer’s directives that enforce accounting standards.

One particularly significant aspect of the current overarching reporting framework is that a very large range of entities is required to lodge financial reports on the public record. Those that are reporting entities must provide general purpose financial reports, complying with the appropriate accounting standards. Within this group, there are a large number which can use the reduced disclosure regime (for example, entities which are not listed or disclosing or governments), applying full recognition and measurement requirements with reduced disclosure. Other entities which do not regard themselves as reporting entities can lodge special purpose financial reports. There is currently confusion as to what measurement requirements must be followed, if any, in special purpose financial reports. There is another group of small entities specifically associations, charities and not-for-profit entities which are usually small in size and for which there is no clear accounting framework and for which general purpose financial reporting may be too onerous.