Accounting Business Reporting for Decision Making

CHAPTER 3 Business structures 109

Consolidated

Notes

2015

$’000

2014

$’000

Other non-current liabilities

Other financial liabilities

20 25 664

—

24 638

25

Total non-current liabilities 171 198 213 015

Total liabilities 551 534 565 208

Net assets 343 479 294 633

EQUITY

Contributed equity

Reserves

Retained earnings

21

22

56 521

17 636

269 322

58 383

16 265

219 985

Total equity 343 479 294 633

FIGURE 3.3 JB Hi-Fi Ltd consolidated balance sheet

Source: JB Hi-Fi Ltd 2015, preliminary annual report, p. 54.

3.12 Differential reporting

LEARNING OBJECTIVE 3.12 Explain the term ‘differential reporting’ and discuss the implications for
disclosing entities.

In recent years, there has been much debate by preparers and users of financial statements in relation to the

applicability of a full set of IFRS for all reporting entities. In response, the Australian Accounting Standards

Board (AASB) has reviewed the financial reporting framework in Australia. In June 2010, the AASB mod-

ified the reporting entity concept by classifying disclosing entities who prepare general purpose financial

statements as either Tier 1 or Tier 2 entities. A Tier 1 entity is basically an entity that is publicly accountable

and a Tier 2 entity is a non-publicly accountable entity (such as unlisted public companies, not-for-profit

private companies, and some public sector entities). Tier 1 entities must still prepare general purpose finan-

cial statements and comply with the disclosure requirements of the AASB standards. Tier 2 entities apply a

reduced disclosure version of the AASB standards, known as the Reduced Disclosure Requirements. This

difference in requirements of reporting is known as differential reporting. The reduction in requirements

for disclosing entities that are not publicly accountable includes disclosures relating to the usage of financial

instruments, business combinations, income tax and financial statement presentation. The full implemen-

tation of these new requirements became applicable from 1 July 2013.

The following reality check provides an update on the AASB’s Differential Reporting project.

REALITY CHECK

Differential Reporting project

The AASB’s Differential Reporting project is being progressed in stages. Stage 1 involved the devel-

opment of Reduced Disclosure Requirements (RDR) for Tier 2 entities and resulted in publication of

AASB 1053 Application of Tiers of Australian Accounting Standards and AASB 2010-2 Amendments to

Australian Accounting Standards arising from Reduced Disclosure Requirements on 30 June 2010. The

AASB is maintaining RDR and monitoring its implementation. Maintaining RDR requirements involves

issuing Tier 2 Exposure Drafts and amending standards, as well as preparing annual compilations of

standards with RDR requirements included. Currently, the AASB is monitoring the work of various regu-

lators including the Australian Charities and Not-for-profits Commission (ACNC). The AASB is also mon-

itoring the IASB’s deliberations in regard to the first comprehensive review of the IFRS for SMEs. Stage 2

involves further research on the remaining AASB proposals in ED 192 Revised Differential Reporting

Framework, in particular, the use of the reporting entity concept for differential reporting purposes.

Source: Australian Government, Australian Accounting Standards Board 2015, ‘An update on the Differential Reporting

project’, 12 January, http://www.aasb.gov.au/admin/file/content102/c3/Differential_Reporting_Project_Update_12_01_2015.pdf.