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									 Explanatory Statement


AASB 101 Presentation of Financial
          Statements




                            October 2006
              EXPLANATORY STATEMENT
Adoption of Australian equivalents to IFRSs
The Australian Accounting Standards Board (AASB) is implementing the
directive of the Financial Reporting Council (FRC) to adopt the Standards of
the International Accounting Standards Board (IASB), for application to
reporting periods beginning on or after 1 January 2005.
The IASB defines International Financial Reporting Standards (IFRSs) as
comprising:
(a)   International Financial Reporting Standards;
(b)   International Accounting Standards (IAS); and
(c)   Interpretations originated by the International Financial Reporting
      Interpretations Committee (IFRIC) or the former Standing
      Interpretations Committee (SIC).
The Australian equivalents to IFRSs are:
(a)   Accounting Standards issued by the AASB that are equivalent to
      Standards issued by the IASB, being AASBs 1 – 99 corresponding to
      the IFRS series and AASBs 101 – 199 corresponding to the IAS series;
      and
(b)   Interpretations issued by the AASB corresponding to the
      Interpretations adopted by the IASB, as listed in AASB 1048
      Interpretation and Application of Standards.
In implementing the FRC’s directive, the AASB has replaced relevant
existing AASB Standards with Australian Standards equivalent to those of
the IASB. The AASB has decided it will continue to issue sector-neutral
Standards, that is, Standards applicable to both for-profit and not-for-profit
entities, including public sector entities. Except for Standards that are
specific to the not-for-profit or public sectors or that are of a purely domestic
nature, the AASB uses the IASB Standards as the “foundation” Standards to
which it adds material detailing the scope and applicability of a Standard in
the Australian environment. Additions are made, where necessary, to
broaden the content to cover sectors not addressed by an IASB Standard and
domestic, regulatory or other issues.
On 15 July 2004, the Board made the set of Australian Standards equivalent
to IFRSs, together with several associated Australian Standards, effective for
annual reporting periods beginning on or after 1 January 2005.



AASB 101                                2   EXPLANATORY STATEMENT
Adoption of IASB Standards is an ongoing process and, as the IFRSs are
revised and amended by the IASB, the AASB undertakes a process to
implement revisions and amendments to Australian equivalents to IFRSs.


Reasons for Issuing AASB 101
AASB 101 Presentation of Financial Statements was first issued in July
2004, and was based on IAS 1 Presentation of Financial Statements
incorporating differences based on previous GAAP. This Standard is
amended as a result of the AASB’s decision to have the same requirements as
IAS 1 in AASB 101 in respect of for-profit entities.
The AASB concluded that, in order to obtain the full benefits of the
Australian adoption of International Financial Reporting Standards, it is
important that Australian Accounting Standards include the same
requirements as IFRSs in respect of for-profit entities.

The AASB considers that any Australian differences from IFRSs have the
potential to result in different outcomes from those that could be achieved
under IFRSs.

In making its decision, the AASB noted that there are inevitably certain costs
associated with the removal of Australian differences. For example, the level
of comparability in financial reporting in Australia may be diminished by the
removal of the encouragements to use certain financial statement formats that
were outlined by the AASB in an Appendix to the previous version of this
Standard. Nevertheless, the AASB is satisfied that the principle of having the
same requirements as IFRSs for for-profit entities is in Australia’s best
interest and that any associated costs will be exceeded by the potential
benefits of consistency between Australian financial reporting requirements
and financial reporting under IFRSs elsewhere in the world.


Main Features of this Standard
This Standard was made by the AASB on 4 October 2006 under
section 334 of the Corporations Act 2001.

Application Date
This Standard is applicable to annual reporting periods beginning on or after
1 January 2007. This Standard may be applied to annual reporting periods
beginning on or after 1 January 2005 but before 1 January 2007.




AASB 101                              3    EXPLANATORY STATEMENT
Scope of Application
This Standard applies to each entity that is required to prepare financial
reports in accordance with Part 2M.3 of the Corporations Act 2001, general
purpose financial reports of each reporting entity and financial reports that
are, or are held out to be, general purpose financial reports.

This Standard supersedes AASB 101 as made on 15 July 2004 and amended
to 8 September 2005.

Amendments
Paragraph Aus3.1 has been deleted. Paragraph Aus3.1 noted that concise
financial reports prepared in accordance with AASB 1039 Concise Financial
Reports are treated in the same manner as for condensed interim reports
prepared in accordance with AASB 134 Interim Financial Reporting. The
Board considers that it is no longer necessary to retain this reminder about
concise financial reports.

Paragraph Aus9.1 has been deleted. Paragraph Aus9.1 stated that the
Corporations Act requires entities to present reports such as Directors’ Report
and Remuneration Report outside the financial report. The Board considers
that it is no longer necessary to retain this reminder about the Corporations
Act requirement.

Paragraph Aus46.1 has been deleted. When the presentation currency is not
Australian currency, paragraph Aus46.1 required the entity to disclose the
reason and justification for using a different currency. The Board considers
that the reason for using a different presentation currency, which entities are
entitled to do under AASB 121 The Effects of Changes in Foreign Exchange
Rates, will be evident from the financial report.

Paragraph Aus48.1 has been deleted. Paragraph Aus48.1 required an entity
to assess its regulatory framework to determine a rounding basis that is
permitted under that regulatory framework. The Board considers that it is no
longer necessary to retain this paragraph.

Paragraph 56.1 has been deleted. Paragraph Aus56.1 required disclosure of
the length of the operating cycle where it is longer than twelve months and
where current assets and current liabilities are presented separately from non-
current assets and non-current liabilities, respectively. The Board considers
that it is no longer necessary to retain this paragraph and that the information
will be evident from the financial report.

Paragraph 68.1 has been deleted. Paragraph Aus68.1 required the entity to
disclose on the face of the statement of financial position retained earnings


AASB 101                               4   EXPLANATORY STATEMENT
attributable to equity holders of the parent. The AASB considers that it is no
longer necessary to retain this paragraph.

Paragraphs Aus69.1, Aus83.1 and Aus97.1 have been deleted. They
encouraged an entity to adopt one of the formats of the financial statements
presented in the Appendix of AASB 101, unless an alternative format is more
relevant in understanding the entity’s financial position, financial
performance and movements in equity. The Board considers that it is no
longer necessary to retain these paragraphs.

Paragraph Aus105.1 has been deleted. Paragraph Aus105.1 noted the
position in the notes of the statement that the financial report is a general
purpose financial report or special purpose financial report and the position in
the notes of the statement of compliance with Australian Accounting
Standards. The Board considers that it is no longer necessary to retain this
paragraph.

Paragraph Aus126.3 has been deleted. Paragraph Aus126.3 required an
entity to make disclosures about an economic dependency where the entity is
dependent on another entity for a significant volume of revenue or financial
support, and that dependency is not clearly discernible from a separate line
item in the income statement or statement of financial position. The Board
considers that it is no longer necessary to retain this paragraph.

The appendix, which provided illustrative examples of a statement of
financial position, income statement and statement of changes in equity, and
the Australian Implementation Guidance (excluding the example in respect of
dividends) have been deleted on the grounds that the provision and/or
retention of additional guidance could be viewed as interpreting IFRSs.

IAS 1 paragraph 101, which notes the alternative formats applicable for
showing changes in equity, has been included.

Paragraph Aus14.3 has been changed to relieve not-for-profit entities from
complying with the paragraph 14 requirement and having to assess whether
they need to make an explicit and unreserved statement of compliance with
IFRSs.


Consultation prior to Issuing this Standard
Public consultation was part of the process undertaken by the AASB prior to
its decision to issue this Standard. An Exposure Draft (ED) containing
proposed revisions, ED 148 Proposed Amendments to AASB 101 Presentation
of Financial Statements: A Revised Presentation was issued for public
comment in April 2006, with a comment period ending on 15 June 2006.


AASB 101                               5   EXPLANATORY STATEMENT
The AASB’s ED 148:
(a)   reproduced the IASB Exposure Draft of Proposed Amendments to
      IAS 1 Presentation of Financial Statements: A Revised Presentation,
      without amendment and sought constituents’ views on the IASB’s
      proposed amendments; and
(b)   identified differences between AASB 101 and IAS 1 and provided the
      AASB’s preliminary views on each difference and sought constituents’
      comments on those views.

One hundred and seventy nine (179) submissions to ED 148 were received
and the AASB considered these submissions in the process of developing this
Standard and in the process of submitting an AASB comment letter to the
IASB on the IASB ED.




AASB 101                             6   EXPLANATORY STATEMENT

								
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