Group entity consolidation relief extended

Not-for-profits and Tier 2 entities can now use the relief that currently exists in AASB 127, 128 and 131 to exempt parent entities with a parent higher up in their group structure from compliance with the consolidation, equity accounting or proportionate consolidation requirements contained in these standards. This follows the Australian Accounting Standards Board's (AASB) recent release of two new amending standards.

AASB 2011-5 Amendments to Australian Accounting Standards – Extending Relief from Consolidation, the Equity Method and Proportionate Consolidation (PDF) extends the relief to not-for-profits so long as the parent entity, venturer or investor and the ultimate or intermediate parent entity are NFP entities that comply with Australian Accounting Standards. It applies to reporting periods commencing on or after 1 July 2011.

AASB 2011-6 Amendments to Australian Accounting Standards – Extending Relief from Consolidation, the Equity Method and Proportionate Consolidation – Reduced Disclosure Requirements (PDF) extends the same relief to Tier 2 entities so long as the parent entity, venturer or investor and the ultimate or intermediate parent entity comply with either Australian Accounting Standards or their RDR equivalents. It applies to reporting periods commencing on or after 1 July 2013.

The changes were exposed in ED 205 and respond to implementation issues associated with the adoption of the reduced disclosure regime (RDR) contained in AASB 1053 Application of Tiers of Australian Accounting Standards. AASB 1053 had seen the subsidiaries of ultimate parents adopting RDR being unable to meet the existing exemption conditions.

Article last updated 11 April 2014