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ASIC has issued a reminder that three new accounting standards coming into effect over the next two years will have the greatest impact on financial reporting since the adoption of the International Financial Reporting Standards (IFRS).
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Harsh reminder from ASIC on new accounting standards
19 December 2016
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The three major accounting standards being introduced are AASB 9 Financial Instruments, AASB 15 Revenue from Contracts with Customers and AASB 16 Leases.
The first two will apply from 1 January 2018 and the third will apply from 1 January 2019; however, early adoption is permitted.
The three new standards will significantly affect the reporting of revenue, the values of financial instruments, loan loss provisions and the impact of lease arrangements.
“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,” ASIC commissioner John Price said.
“Given the extent of the changes to financial reporting, 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.”
According to ASIC, the new standards will have the greatest impact on financial reporting since the IFRS were adopted in 2005, and for some companies the impact could be even more significant than was the case with the adoption of the IFRS.
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ASIC released an accompanying list of matters that preparers of financial reports should consider.
These include required system changes, business impacts, impacts on compliance with financial requirements, disclosures required in financial reports prior to the effective dates of the standards, possible continuous disclosure obligations, and the impact on any fundraising or other transaction documents.
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