Abhishek Sharma
Abhishek is the Director of Audit and Assurance here at MGI Dobbyn Carafa and is a registered company auditor. He works primarily with large organisations and not-for-profit entities to assist with all matters in relation to audit and assurance.
Are you ready for General Purpose Financial Reports?
Changes to financial reporting comes into effect as at 30 June 2022
For a long time, Australian for-profit entities that have historically prepared special purpose financial statements will now need to transition into preparing General Purpose Financial Reports (GPFR) for reporting periods commencing on or after 1 July 2021. This represents a seismic shift in reporting requirements for most Australian small businesses and entities.
Who is affected by the changes?
Accounting firms
Some accounting firms may not be aware of the changes that will affect how they implement these new changes for their clients, as they simply may have not been informed by their incumbent auditors. This means you may be on the back foot when it comes to template creation and operational process of identification and implementation.
Small business owners
Entities that have previously reported their financial position using Special Purpose Financial Statements will most likely now need to report using the General Purpose Financial Reports – simplified disclosures. This means that the depth of disclosures for such reports will become more required.
New entities from 1 July 2021
Any new entity established from 1 July 2021 that has a constituting document stipulating the requirement to prepare financial statements that comply with the Australian Accounting Standards will most likely be required to prepare GPFR.
For profit entities required by legislation
There are a number of entities at risk if the following entities such as Co-Operatives; Incorporated Associations; and Higher Education providers are for profit. They will now need to report their disclosures using GPFR.
Summary of entities affected
Entities required to prepare GPFR prior to 1 July 2021
- Listed public companies or public trading trusts
- A CBC reporting entity
- Tier 1 not-for-profit entities
Entities required to prepare GPFR after 1 July 2021
- Listed public companies or public trading trusts
- A CBC reporting entity
- Tier 1 not-for-profit entities
- Unlisted public companies
- Large proprietary companies with revenue of $50M or more (including Grandfathered)
- Small proprietary companies that are foreign-controlled
- Small proprietary companies that have crowd-sourced funding shareholders at any time
- Co-Operatives (for profit)
- Incorporated Associations (for profit)
- Higher Education providers (for profit)
- Australian Financial Services Licence (AFSL) holders
- Private trusts established after 1 July 2021
- Partnerships established after 1 July 2021
- Joint arrangements created after 1 July 2021
- Self-managed superannuation funds established after 1 July 2021
What are the points I must consider?
We understand that this may come as a shock to you and you may have more questions to ask. We have put together a little checklist and points to consider, so that you can ask the right questions:
- Does my business fall into any of the categories above?
- Has my business always complied with all applicable recognition and measurement requirements including consolidation and equity-method accounting? (If so, such entities would have a choice of applying either options covered under point 3)
- What options are available for transition? (AASB 1 – Transitional reliefs are available in certain areas; AASB108 – Full restatement of the current and comparative periods required (unless impractical)
If an eligible entity had complied with all applicable recognition and measurement requirements, the impact of the adoption of new and additional disclosures of General Purpose Financial Reports will be minimal.
Next steps
At MGI Dobbyn Carafa Audit and Assurance, we not only work with our existing clients to help navigate through these changes, we also partner with accounting firms who may have been caught off guard with this change in requirement by providing assistance to help setup templates and identification of clients affected. We can even provide audit and assurance services should the need arise.
For a confidential discussion, please use the link below and let us buy you a coffee to discuss your requirements.
