Question

In February 2012, the Australian Accounting Standards Boards decided at its meeting to propose the withdrawal of AASB 1031 Materiality. There were several reasons for this proposal which includes: there is no International Reporting Standard equivalent and it does not look like there will be, since 2005 there has been the gradual withdrawal of additional Australian guidance from a number of Australian Accounting Standards, and there is now an updated guidance on materiality in the IASB Conceptual Framework. The major impact of the withdrawal of AASB 1031 is the removal of the specific quantitative guidance for materiality. The withdrawal of AASB 1031 became effective to annual reporting beginning on or after 1 July 2015. REQUIRED: 1. Summarize the significant changes with AASB 1031 Materiality (issued by the Australian Accounting Standards Boards - AASB) from 1995 to 2015.

Answer 1

The withdrawal of AASB 1031 materiality amends the AASB 108 Accounting policies, Changes in Accounting Estimates . The term 'Material' is defined in AASB 108 Accounting policies, Changes in Accounting Estimates and Errors. When assessing materiality, the requirements in AASB 101 Presentation of financial statements and AASB 108 shall be applied.

AASB 1031 was issued the framework for the preparation and presentation of Financial statements contained limited guidance on materiality. Accordingly, as part of the AASB's implementation of the financial reporting council's policy of adopting the standards of the International Accounting Standards Board for application to reporting periods beginning on or after 1 January 2005, the AASB decided to retain AASB 1031, in a revised format, to ensure that the meaning of materiality remained well explained.

The withdrawal of AASB 1031 requires consequential amendments to all AASB (including interpretations) to remove references to AASB 1031. Until all such references have been removed, this revised AASB 1031 is an interim standard that cross-references to other standards and the framework for the presentation and preparation of financial statements that contain guidance on materiality.