Financial Reporting Centre

Overview

As organisations continue to face the challenges of climate change, more emphasis is being placed on how organisations report to stakeholders on their exposures and the processes they have in place to manage climate change. Expectations on how these are reported in the annual report, including the financial report, are increasing.

Careful consideration will be required of how the risks and potential impacts of climate change are reflected in financial reports to ensure clear and meaningful disclosures.

Need assistance including the impacts of sustainability and climate change impacts in your annual report?

Overview

Accounting for financial instruments is a complex area governed by multiple standards. Whilst principally governed by AASB 9 Financial Instruments; AASB 132 Financial Instruments: Presentations, AASB 7 Financial Instruments: disclosures and in some instances AASB 139 Financial Instruments: Recognition and Measurement, the substance and contractual terms play an important part in the financial reporting of an organisation’s financial arrangements.

Accounting for financial instruments is a nuanced affair, whether it is dealing with the classification of funding as debt or equity, accounting for sales of financial assets, modification of debt arrangements, hedge accounting or impairment. As financial products continue to evolve, together with changes in economic conditions and regulations, the challenges faced in accounting for financial instruments continues.

Overview

The leases standard, AASB 16 Leases, requires organisations that are lessees to recognise the majority of leases on-balance sheet. Lessees are required to recognise a right-of-use asset and lease liability, providing more transparency about an organisation's lease commitments.

Organisations need to ensure they have robust systems in place to capture and manage their leasing data and judgements. In addition, organisations are faced with broad ranging challenges including managing the impacts on debt covenants and credit ratings as well as impairment testing and tax-effect accounting.

Overview

The revenue standard, AASB 15 Revenue from Contracts with Customers requires organisations to apply a five step model to recognise revenue and to provide enhanced disclosures that give insight into their revenue streams. Nuances in the standard and complex revenue transactions can be challenging for organisations to navigate through.

Not-for-profit entities face even greater challenges applying AASB 15 as they also apply AASB 1058 Income for Not-for-profits at the same time. Complexities exist for these organisations in determining which standard to apply (AASB 15 or AASB 1058) and how to apply a for-revenue standard to not-for-profit transactions.