If you work with not-for-profit entities (NFPs), two new developments are worth having on your radar (even though the effective date is still a little way off):
- tighter rules around when certain NFPs can prepare special purpose financial statements (SPFS); and
- the introduction of a new, simpler general purpose financial statement (GPFS) option, Tier 3 GPFS, designed for NFP private sector entities.
SPFS: the ‘reporting entity’ concept is being wound back for certain NFPs
Under AASB 2026-2 Extending the Application of the Conceptual Framework and Limiting and Ability of Not-for-Profit Entities to Prepare Special Purpose Financial Statements (AASB 2026-2), the ability for certain NFPs to use the ‘reporting entity’ concept (and therefore prepare SPFS under Australian Accounting Standards) is being removed.
- Who’s in scope? Broadly, NFPs required by legislation to prepare financial statements that comply with Australian Accounting Standards (or accounting standards), plus other NFPs where their constituting document (or another document, like a grant agreement) requires compliance with Australian Accounting Standards and that document is created or amended on/after 1 July 2029.
- What’s the practical impact? In-scope NFPs will need to move to general purpose financial statements (GPFS), possibly for the first time. Depending on eligibility, that could mean Tier 1, Tier 2, or (for some) the new Tier 3 GPFS.
- Application date? The changes apply for annual reporting periods beginning on or after 1 July 2029 (early adoption permitted).
Tier 3 GPFS: a new, stand‑alone (and simpler) option for NFP private sector entities
AASB 1061 General Purpose Financial Statements – Not–for-Profit Private Sector Tier 3 Entities (AASB 1061) introduces a new reporting tier for not‑for‑profit private sector entities preparing GPFS. It’s a stand‑alone standard with its own recognition, measurement, presentation and disclosure requirements, built to be more proportionate (and less painful) than Tier 1 or Tier 2.
To coincide with the move from preparing SPFS to GPFS for those impacted NFPs, AASB 1061 applies for annual reporting periods beginning on or after 1 July 2029 (early adoption permitted).
- Who is it aimed at? NFP private sector entities that do not have public accountability and are not prohibited from applying Tier 3 by legislation or their constituting (or other) documents.
- Why does it matter? For some NFPs, Tier 3 could be a more manageable stepping-stone into GPFS — especially for organisations moving away from SPFS.
- What gets simpler? The standard is designed to reduce complexity and disclosure burden. For example, it includes simplified approaches in areas like leases (expensed), provisions (not discounted), and a more straightforward model for revenue recognition and impairment of financial assets (based on objective evidence).
What should you do now?
- Check whether you’re in scope of the new requirements to move from preparing SPFS to GPFS
- If so, work out what Tier reporting framework is applicable: Tier 1, Tier 2 or Tier 3 GPFS.
- Do a quick ‘gap scan’ of the big-ticket areas that often change when moving from SPFS to GPFS
- Decide on timing, including whether early adoption would actually make things easier (or just earlier).
More information
For an overview of these requirements (including scope, transition and high level analysis of the changes), see Pitcher Partners Financial Reporting guides:
- Financial reporting guide: Not-for-profits and the removal of special purpose financial statements (June 2026)
- Financial reporting guide: Not-for-profit Private Sector Tier 3 Entities (June 2026)
Further, the AASB will likely produce further resources on their website on these topics, in due course.
