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AASB 7 applies now
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In response to the credit crisis and to reduce differences between IFRS and USGAAP, amendments have been made to IAS 39 to allow non derivative financial assets held for trading and available for sale to be reclassified in rare circumstances. As a result of these amendments, the IASB have also amended IFRS 7 to require specific disclosures in relation to the reclassifications when the IAS 39 amendments are applied.  
 
The changes have now been released in Australia as AASB 2008-10 Amendments to Australian Accounting Standards – Reclassification of Financial Assets and apply from 1 July 2008. They cannot be applied to financial reporting periods that ended before that date.  
 

 
AASB 7 Financial Instruments – Disclosure is mandatorily applicable for financial years beginning on or after 1 January 2007, that is, 30 June 2008 year ends, replacing both AASB 130 Disclosures in the Financial Statements of Banks and Similar Financial Institutions and the disclosure requirements contained in paragraphs 51-95 of AASB 132 Financial Instruments: Disclosure and Presentation  
 
Aiming to improve the information provided in the financial report, the disclosures are designed to give shareholders insights into how management manages and controls financial risks. All reporting entities and all types of financial instruments, including the basic ones like cash, accounts receivable and accounts payable are covered by these disclosures, giving AASB 7 wide ranging application.  
The message from members who have already prepared their AASB 7 disclosures is BEWARE. These disclosures are far more comprehensive than the previous requirements, requiring entities to collate more information. Comparative information for the 2007 financial year also needs to be prepared and audited and there is no exemption for parent entity disclosures, both of which further add to the information collection requirements.  
 
Members involved in the preparation and audit of financial reports therefore need to ensure that they or their clients are adequately prepared for the requirements of this standard and are actively engaged in collecting the information that they will require in order to produce the required disclosures with comparatives. 
 
A copy of the standard is available on the AASB website and also in the Members’ Handbook. The AASB website also includes access to the IASB's “Basis for Conclusions” and “Implementation Guidance” to assist members applying the standard's requirements.  
 
Other information available to assist members apply the standard includes Charter articles in February 2007 and March 2008, specimen disclosures contained in the specimen financial reports of the major firms and technical conference papers. For more details on these resources visit the AASB 7 section of our website. 
 
Members are also reminded that adoption of AASB 7 also requires the mandatory adoption of AASB omnibus 2005-10. The AASB website contains a complete list of the versions of the standards applicable for 30 June 2008 which include compilations of all omnibus amending standards applicable to this date. 
 
To access this table visit the AASB website select 'AASB standards' then click on the link in the introductory panel to 'Standards applying mandatorily to 30 June 2008'. Members should refer to this table to ensure they are applying the correct versions of the standards.