We're a Baker Tilly network member
Learn more
Back to top
Our advocacy work: Development of simplified accounting requirements for NFPs
Article

Our advocacy work: Development of simplified accounting requirements for NFPs

The Australian Accounting Standards Board (AASB) published a discussion paper in September 2022 intending to create simplified accounting requirements for smaller not-for-profits (NFPs).

The simplified accounting requirements, to be known as Tier 3, is intended to replace the ability for certain types of NFPs to prepare special purpose financial statements, currently prepared in accordance with the ‘reporting entity’ concept.

This concept is being phased out by the AASB due to inconsistent application issues in Australia and closer alignment with international requirements.

In our response, consistent with development in the for-profit sector, we support the removal of the ‘reporting entity’ concept for NFPs that have legislative requirements to prepare financial statements in accordance with ‘Australian Accounting Standards’.

However, we did not support the removal of this concept for other types of reporting by NFPs.

We agree that the discussion paper is a good start to developing simplified accounting requirements for smaller NFPs, with simpler recognition and measurement requirements as well as reduced disclosures.

Our support is dependent on the following existing within the Tier 3 standard:

  • It is predominantly self-contained, including its own summarised conceptual framework;
  • It is based on requirements that already exist internationally or exist in other comparable jurisdictions rather than the AASB spending time and resources developing a framework from first principles;
  • It does not contain reporting thresholds for its application, with this being left to regulators and policy makers;
  • It deals with areas that commonly exist in smaller NFP entities, rather than deal with all topics in the full suite of accounting standards;
  • Effective transition arrangements are developed which deals with entities that either currently prepare Tier 1, Tier 2 or special purpose financial statements;
  • Disclosures are reduced further than that already in the Tier 2 Simplified Disclosure requirements; and
  • It is reviewed once every five years (or after three years if there was a substantive case for doing so).

You can read our submission below.

You can find out more about our advocacy work on the website here.

This content is general commentary only and does not constitute advice. Before making any decision or taking any action in relation to the content, you should consult your professional advisor. To the maximum extent permitted by law, neither Pitcher Partners or its affiliated entities, nor any of our employees will be liable for any loss, damage, liability or claim whatsoever suffered or incurred arising directly or indirectly out of the use or reliance on the material contained in this content. Pitcher Partners is an association of independent firms. Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities. Liability limited by a scheme approved under professional standards legislation.

Pitcher Partners insights

Get the latest Pitcher Partners updates direct to your inbox

Thank you for you interest

How can we help you?

Business or personal advice
General information
Career information
Media enquiries
Contact expert
Become a member
Specialist query
Please provide as much detail to ensure appropriate allocation of your query
Please highlight a realistic time frame that will enable us to provide advice within a suitable and timely manner. Please note given conflicting demands with our senior personnel, we will endeavour to respond to you within the nominated time frame. If you require an urgent response, please contact us on 03 8610 5477.
CPN Enquiry
Business Radar 2024
Tax facts 2023-24
Student careers 2023-24
Search by industry