Financial reporting periods ending on or after 30 June 2018

Australian financial reporting guide Financial reporting periods ending on or after 30 June 2018

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Australian financial reporting guide | Table of contents

Table of contents

1 Introduction

2

2 About this guide

3

3 Types and classifications of entities

6

4 Reporting mandate

11

5 The Australian differential reporting framework

38

6 Preparation of annual financial reports

49

7 Other financial reporting considerations

91

8 What's new in financial reporting?

106

9 Using the illustrative financial statements

132

10 Illustrative disclosures

145

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Australian financial reporting guide | Introduction

1 Introduction

Financial reports for 30 June 2018 represents a tale of two realities

Firstly, for half-year financial reports, the implementation of the new standards on financial instruments and revenue recognition introduces both new and transitional disclosure requirements. Although the requirements in half-year reports are not as significant as for annual reports, entities that have been significantly impacted by the new standards should ensure their disclosure is transparent and robust in their half year reports.

Secondly, entities with a June year end must now ensure they are well prepared for these new Standards, and disclose all known and reasonably estimable information to investors and other users of financial reports, particularly where the entity has public accountability.

We have re-presented relevant sections in this guide to make it clear which illustrative disclosures and other information is relevant for annual reports and halfyears. We have also updated many sections of the guide and introduced new guidance on determining and changing financial years under the Corporations Act 2001.

We are continuing to base our models on a December year end, which aligns with the application date of the majority of the new and revised standards, providing companies more time to prepare for and implement these changes. Therefore, entities are able to use this guide in conjunction with the either the 2017 editions of the model financial statements, or for half-years, in conjunction with the December 2018 edition of our model half-year financial report.

June 2018

"The new standards require significant additional disclosures. I encourage you to present this information in a way that is relevant and provides clarity regarding the impacts of the new standards"

Alison White National Leader Accounting Technical

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Australian financial reporting guide | About this guide

2 About this guide

This financial reporting guide is designed to allow you to understand and efficiently meet your financial reporting obligations

2.1 How to use this guide This guide is designed to be used in conjunction with the Deloitte model financial statements. Set out below is a summary of how to use this guide

Step 1. Categorise the entity Australian financial reporting requirements are driven by the type of the entity. This guide is predominantly focused on entities reporting under the Corporations Act 2001, which defines various categories of entities, their reporting requirements and their reporting deadlines. More guidance is available in Section 3 Types and classifications of entities.

Step 2. Understand the reporting mandate In addition to the core requirements of the Corporations Act 2001, some entities have additional reporting considerations arising under other mandates such as the `general purpose financial statements' requirement arising under the Tax Administration Act 1953, constitution requirements, agreements or funding arrangements. More information is available in Section 4 Reporting mandate.

Step 3. Determine which type of financial statements should be prepared Australia's reporting framework relies on two core considerations: The reporting entity concept which primarily determines whether an entity prepares general purpose

financial statements or special purpose financial statements The differential reporting framework arising under Australian Accounting Standards, which introduces

different types of general purpose financial reports More information can be found in Section 5 The Australian differential reporting framework.

Step 4: Understand the key requirements for financial statements The layout and composition of the financial statements and notes are governed by various factors, including the Corporations Act 2001, Accounting Standards and other regulations. More information can be found in Section 6 Preparation of annual financial reports.

Step 5. Other financial reporting considerations Having prepared the key financial report, entities may need to consider other reporting obligations including continuous disclosure, half-year reporting, concise financial reports and relevant financial reporting. More information on these topics is in Section 7 Other financial reporting considerations .

Step 6. Ensure any new and changed requirements are considered Financial reporting requirements change rapidly, from minor and major amendments to core accounting requirements to regulatory changes, other legislative changes and global trends which should be considered. More information can be found in Section 8 What's new in financial reporting?

Step 7. Access the relevant model financial statements Based on the analysis performed, obtain the relevant model financial statements. Guidance on choosing the version of the model financial statements to use can be found in Section 9 Using the illustrative financial statements.

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Australian financial reporting guide | About this guide

Requirements and illustrative disclosures in this guide which are not applicable to `Tier 2' general purpose financial statements have been shaded in grey.

2.2 Purpose We have developed this Australian financial reporting guide (guide) to assist you meet the general financial reporting requirements applying to the majority of entities reporting under the Corporations Act 2001. It is developed to be used in conjunction with our model financial reports i.e.:

Deloitte International GAAP Holdings model financial statements for the year ended 31 December 2017 (Deloitte model financial statements),

Model half-year report - Half-years ending on or after 31 December 2018 Model special purpose annual - Reporting periods ending on or after 31 December 2017.

2.3 Effective date This guide includes reporting obligations and illustrative disclosures that are effective for financial years and half-years ending on 30 June 2018.

2.4 Abbreviations The following abbreviations are used in this guide:

Abbreviation

Description

AASB

Australian Accounting Standards Board

Accounting Standards

Australian Accounting Standards issued by the Australian Accounting Standards Board

ASA

Australian Auditing Standard issued by the Auditing and Assurance Standards Board

ASIC

Australian Securities & Investments Commission

ASIC-CO/ ASIC-CI

Australian Securities and Investments Commission Class Order/Corporations Instrument issued pursuant to s.341(1) of the Corporations Act 2001

ASIC-RG

Australian Securities and Investments Commission Regulatory Guide

ASX

Australian Securities Exchange

ASX-LR

Australian Securities Exchange Limited Listing Rule

ASX-GN

Australian Securities Exchange Limited Guidance Note

ATO

Australian Tax Office

Corporations Act

The Corporations Act 2001

Deloitte model half-year report

Deloitte Model half-year report -Half-years ending on or 31 December 2018

Deloitte model IFRS financial Deloitte International GAAP Holdings Limited model financial statements for the year ended

statements

31 December 2017

Deloitte model MIS report Deloitte Model managed investment scheme annual report for the year ending 30 June 2018

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Australian financial reporting guide | About this guide

Abbreviation Deloitte model financial reports

Deloitte model SPFS GPFS IASB IFRS/s Int s. SPFS Tax Administration Act RDR Reg

Description

Collectively: Deloitte International GAAP Holdings Limited model financial statements for the year

ended 31 December 2017 Deloitte Model special purpose annual report - Reporting periods ending on or

31 December 2017 Deloitte Model half-year report - Half-years ending on or 31 December 2018 Deloitte Model managed investment scheme annual report for the year ending 30 June

2017 Deloitte Illustrative AASB 1056 Financial Report for Superannuation Entities for the

financial year ended 30 June 2017

Deloitte Model special purpose annual report - Reporting periods ending on or 31 December 2017

General purpose financial statements

International Accounting Standards Board

International Financial Reporting Standard/s

Interpretation issued by the Australian Accounting Standards Board

Section of the Corporations Act 2001

Special purpose financial statements

Tax Administration Act 1953

Reduced Disclosure Requirements

Regulation of the Corporations Regulations 2001

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Australian financial reporting guide | Types and classifications of entities

3 Types and classifications of entities

The different types and classifications of entities defined in and governed by the Corporations Act influences for example whether or not the entity is required to prepare a financial report under the Corporations Act and if so whether or not it has to be audited and lodged with ASIC.

This section provides a high-level overview of the following types and classifications of entities:

Topic

3.1 Companies

3.2 Registered schemes

3.3 Not-for-profit entities

3.4 Other types of entities 3.4.1 Disclosing entities 3.4.2 Crowd-sourced funded entities 3.4.3 Stapled entities 3.4.4 Australian Financial Services Licence (AFSL) holders

3.1 Companies 3.1.1 Types of companies The following types of companies can be registered under the Corporations Act (s.112(1)):

Type of company

Public

Proprietary

companies* companies

Limited by shares A company formed on the principle of having the liability of its members limited to the amount (if any) unpaid on the shares respectively held by them (s.9).

Limited by guarantee

-

A company formed on the principle of having the liability of its members limited to the

amounts that the members undertake to contribute to the property of the company if it

is wound up (s.9).

Unlimited with share capital A company whose members have no limit placed on their liability (s.9) and which is incorporated with a share capital.

No liability company

-

A company may only register as a no liability company if:

The company has a share capital

The company's constitution states that its sole objects are mining purposes (as

defined in s.9 of the Corporations Act)

The company has no contractual right under its constitution to recover calls made

on its shares from a shareholder who fails to pay them constitution state (s.112(2)).

* A public company is a company other than a proprietary company and can be listed or unlisted.

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Australian financial reporting guide | Types and classifications of entities

3.1.2 Proprietary companies Companies registered under the Corporations Act as proprietary companies must:

Be limited by shares or an unlimited company with share capital, which means that companies limited by guarantee and no liability companies cannot be proprietary companies

Not have more than 50 non-employee shareholders Except in limited circumstances, not do anything that would require disclosure to investors under Chapter 6D of

the Corporations Act, i.e. the fundraising provisions of the Act.

The Corporations Act classifies a proprietary company as either a large proprietary company or a small proprietary. A proprietary company is a large proprietary company or a small proprietary for a financial year if it satisfies at least two of the conditions noted for Large or Small below respectively:

Condition

Consolidated revenue for the financial year of the company and the entities it controls (if any)

Value of the consolidated gross assets at the end of the financial year of the company and the entities it controls

Number of employees of the company and the entities it controls at the end of the financial year

Value ? Large $25 million or more

Value - Small Less than $25 million

$12.5 million or more Less than $12.5 million

50 or more

Less than 50

The definition of a large proprietary company and small proprietary company in s.45A(3) and s.45A(2) respectively of the Corporations Act notes that the amounts specified in these definitions may be varied by the Regulations. At the time of printing no specified amounts have been varied by the Regulations.

Section 45A of the Corporations Act requires that when counting employees, part-time employees be taken into account as an appropriate fraction of a full-time equivalent. Consolidated revenue and the value of consolidated gross assets are calculated in accordance with the accounting treatment specified by Accounting Standards in force at the relevant time (even if the standards do not otherwise apply to the company).

See sections 4.1.3 and 4.1.4 for a discussion on the reporting mandate for proprietary companies.

3.1.3 Small companies limited by guarantee In terms of s.45B a company is a small company limited by guarantee in a particular financial year if:

(a) It is a company limited by guarantee for the whole of the financial year (b) It is not a deductible gift recipient at any time during the financial year (c) Either:

(i) where the company is not required by the accounting standards to be included in consolidated financial statements ? the revenue of the company for the financial year is less than $250,000, or

(ii) where the company is required by the accounting standards to be included in consolidated financial statements ? the consolidated revenue of the consolidated entity for the financial year is less than $250,000

(d) It is not one of the following: (i) a Commonwealth company for the purposes of the Commonwealth Authorities and Companies Act 1997 (ii) a subsidiary of a Commonwealth company for the purposes of that Act (iii) a subsidiary of a Commonwealth authority for the purposes of that Act

(e) It has not been a transferring financial institution of a State or Territory within the meaning of clause 1 of Schedule 4 to this Act (i.e. Corporations Act)

(f) It is not a company that is permitted to use the expression building society, credit society or credit union under section 66 of the Banking Act 1959 at any time during the financial year.

Section 45B(2) of the Corporations Act notes that the amounts specified in (1)(c)(i) and (ii) above (ie. s.45(1)) may be varied by the Regulations. At the time of printing no specified amounts have been varied by the Regulations.

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