Disclosure of accounting standards issued not yet effective


There has been a lot of discussion (including one of our own publications) about the disclosure initiative or decluttering financial statements. 

The most common question we get asked by clients is what does that mean for the disclosure around new accounting standards adopted for the period and accounting standards that have been issued but are not yet effective?

So, while the AASB make statements such as:

  • entities are not required to disclose immaterial information in their financial statements; and

  • just because a standard contains a list of disclosures does not mean that an entity must always make each of those disclosures in its financial statements. 

and ASIC state:

  • we will not pursue immaterial disclosures that may add unnecessary clutter to financial reports.

Does that mean financial reports no longer need to contain a blurb around the possible impact of new standards?

The answer is it depends!

ASIC has clarified its position on this disclosure in a publication ‘16-442MR Companies need to respond to major new accounting standards’.  In that publication, the ASIC Commissioner John Price said:

'We remind directors and management of the importance of planning for the new standards and informing investors and other financial report users of the impact on reported results.
…it is important to determine the extent of any impact now and to put in place implementation plans for these new standards.
Public disclosure on the impact of the standards and timely implementation is important for investors and to retain market confidence.'

Quite often the table of accounting standards issued but not yet effective can be 20+ items long.  ASIC is not concerned about some small change in a non-descript standard but rather the key new standards and/or key impacts of changes in accounting standards on an entity.  ASIC have illustrated this but including it as one of their focus areas for 31 December 2016 financial reports, where they state:

‘Directors and auditors should ensure that notes to the financial statements disclose the impact on future financial position and results of new requirements for recognising revenue, for valuing financial instruments, and accounting for leases. These new requirements will apply to future financial reports and may significantly affect how and when revenue can be recognised, the values of financial instrument (including loan provisioning and hedge accounting), and assets and liabilities relating to leases.’



Therefore entities should focus on the three major accounting standards being introduced and/or any other significant changes impacting their business.  These standards are:

  • AASB 9 Financial Instruments;

  • AASB 15 Revenue from Contracts with Customers; and

  • AASB 16 Leases.

For example, since ASIC has highlighted this as a surveillance project it would be counter intuitive for an entity to present a commitments note highlighting significant operating lease commitments and then have a statement that the impact of the new leases standard will have an unknown or immaterial impact.

At Moore Stephens we welcome the new disclosure initiative, however we strongly advise caution before making any changes in your financial reporting without seeking professional advice. The disclosure initiative is open for interpretation, so to ensure you are covered from a compliance and reputational perspective, please contact your local Moore Stephens office at your convenience to discuss this opportunity. At Moore Stephens, we are here to help you through this process so that you can streamline your reporting and get back to doing what you do best – running your business.