Welcome to the premier edition of Beyond the Numbers for 2025. Our monthly newsletter provides a summary of the latest developments from domestic and global standard-setting bodies and regulatory authorities.
Top story
The Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024 (the Act) received Royal Assent on 10 December 2024.
The Act extends the Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) regime to include services provided by real estate professionals, dealers in precious metals and stones, and professional service providers including accountants, legal practitioners, conveyancers, professional trustees and company secretarial services.
Relevant accountants’ services include:
- assisting a person to create or restructure a body corporate;
- acting as a director or secretary of a company;
- providing a registered office address or principal place of business address of a body corporate;
- assisting a person in a transaction to sell, buy or transfer a body corporate.
The amendments are effective from 31 March 2026.
The Impact Analysis prepared by the Attorney-General’s Department noted that the estimated total upfront and ongoing annual regulatory cost on the accounting services industry will be $562 million and $245 million, respectively. The government expects the additional compliance costs to be passed on to consumers.
Local reporting
Chartered Accountants Australia and New Zealand (CA ANZ) has released its December 2024 financial reporting publication for both Australia and New Zealand. The guides cover newly effective standards and amendments, as well as those yet to be mandatory.
Key topics include presentation and disclosure in financial statements, Not-for-profit (NFP) reporting, impacts of tax legislation, climate-related disclosures, and regulator’s focus areas.
The publications are available for CA ANZ members to access and download from their website.
The AASB released two Exposure Drafts to significantly alter the financial reporting framework for NFP entities:
- Exposure Draft ED 334 Limiting the Ability of Not-for-Profit Entities to Prepare Special Purpose Financial Statements; and
- Exposure Draft ED 335 General Purpose Financial Statements – Not-for-Profit Private Sector Tier 3 Entities.
ED 334 proposes to remove the ‘reporting entity’ concept currently applied by many NFP entities and require general purpose financial statements where a NFP is required:
- by legislation to comply with either Australian Accounting Standards or accounting standards; or
- by their constituting document or another document to prepare financial statements that comply with Australian Accounting Standards.
This change would affect large and medium-sized charities registered with the ACNC and many incorporated associations, co-operatives and other NFP entities.
ED 335 proposes a new simplified Tier 3 general purpose financial statements framework for smaller private sector NFP entities. The new framework aims to simplify many of the recognition, measurement, and disclosure requirements compared to both Tier 1 and Tier 2 general purpose financial statements.
NFP stakeholders can get involved by completing an online survey for:
or visit the AASB website.
Both Exposure Drafts are open for public comment until 28 February 2025.
The Department of Treasury and Finance (DTF) has released its December 2024 Accounting Policy Update, highlighting key developments for Victorian public sector entities:
- Tiered Financial Reporting: The new FRD 101 Application of Tiers of Australian Accounting Standards effective for annual reporting periods beginning on or after 1 July 2024.
- FRD 103 Non-financial physical assets update: The updated FRD 103 on non-financial physical assets includes clarifications on fair value measurement (from from AASB 2022-10 Amendments to Australian Accounting Standards – Fair Value Measurement of Non-Financial Assets of Not-for-Profit Public Sector Entities). The revised standard is effective from 1 January 2024.
- Sustainability Reporting
- Consolidated Entity Disclosure Statement
Regulations
ASIC has released its focus areas for the December 2024 financial reporting season, which are largely consistent with those for June 2024.
The enduring focus areas are:
- impairment and asset values
- provisions
- subsequent events, and
- disclosures in the financial report, Operating and Financial Review (OFR), non-IFRS financial information, and half-year reports.
In addition, ASIC’s particular focus areas are previously ‘grandfathered’ large proprietary companies and registrable superannuation entities.
Finally, ASIC reminded public companies of the new consolidated entity disclosure statement.
Australia’s financial reporting landscape is currently overseen by three bodies: the Financial Reporting Council (FRC), the Australian Accounting Standards Board (AASB), and the Auditing and Assurance Standards Board (AUASB).
The government is proposing to merge these bodies to create a single entity responsible for overseeing and setting standards for accounting, auditing and climate-related disclosures.
Furthermore, it is proposed that the functions and powers relating to the FRC’s oversight of the AASB and AUASB will form part of the new body’s internal management.
The new body is intended to be operational on or after 1 July 2026, subject to the passage of legislation.
Responses to Treasury’s consultation paper are due by 21 February 2025.
ASIC has identified several key issues it will focus on in 2025, including:
- poor quality climate-related financial disclosures leading to misinformed investment decisions
- poor audit quality resulting in declining market confidence and misinformed investment decisions
- superannuation members being let down by their fund and trustee
- consumer losses through fraud and scams, and
- cyber-attacks, data breaches, and internal system failures undermining market confidence and causing financial loss.
These key issues will drive ASIC’s strategic and operational activities outlined in its Corporate Plan for 2024-25.
Sustainability
The International Sustainability Standards Board (ISSB) recently hosted a webcast discussing proportionality mechanisms within IFRS S1 and IFRS S2. These mechanisms help companies, especially smaller ones, meet disclosure requirements based on their size and resources. The three-part webcast covers:
- Introduction to proportionality mechanisms in the ISSB Standards
- ‘All reasonable and supportable information that is available to the company at the reporting date without undue cost or effort’
- ‘Commensurate with skills, capabilities and resources that are available to the company’
This can be accessed from the IFRS website or YouTube channel.
The ISSB released its latest podcast episode covering global progress towards climate-related disclosures and its recent education material on sustainability-related risks and opportunities.
The International Accounting Standards Board (IASB) released its new webcast series emphasising the connectivity between financial statement and sustainability-related financial information.
Relationships such as climate-related risks and impairment of non-financial assets, climate-related opportunities and changes in product mix, and climate-related commitments were briefly covered through high-level examples.
The webcast series can be accessed from the IFRS website or YouTube channel.
IFRS developments
The International Accounting Standards Board (IASB) amended IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures to improve the accounting and measurement of nature-dependent electricity contracts. These contracts enable businesses to procure electricity directly from renewable energy sources, where output varies due to natural conditions.
Key changes to the IFRS Standards include:
- clarifying the application of the ‘own-use’ requirements;
- permitting hedge accounting if these contracts are used as hedging instruments; and
- adding new disclosure requirements to enable investors to understand the effect of these contracts on a company’s financial performance and cash flows.
These amendments apply for annual reporting periods beginning on or after 1 January 2026, with early adoption permitted.
The Nature-dependent Electricity Contracts amendments are currently available exclusively to premium IFRS.org subscribers. However, these amendments will soon be integrated into the 2025 consolidated IFRS Accounting Standards, at which point all registered users will have access.
The IASB proposes amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets to clarify how companies assess when to record provisions and how to measure them. The amendments would also require companies to provide more information about the measurement of provisions.
The proposed amendments aim to:
- Refine the recognition of a provision by clarifying the tests for when an entity has an obligation (an obligation condition), the nature of the entity’s obligation to transfer an economic resource (the transfer condition), and the past event condition.
- Clarify the costs included in provisions by limiting the inclusion of all direct costs associated with a provision.
- Clarify the application of discount rates by proposing the use of a risk-free rate for long-term provisions, with no adjustment for non-performance risk.
The amendments would also result in the withdrawal of IFRIC Interpretation 6 Liabilities arising from Participating in a Specific Market – Waste Electrical and Electronic Equipment and Interpretation 21 Levies.
Depending on an entity’s existing accounting policies, the IASB’s proposals may result in larger provisions.
The comment period on the IASB exposure draft is open until 12 March 2025.
The IFRS Interpretations Committee (IFRIC) last met on 26 November 2024.
During the meeting, IFRIC finalised its agenda decision regarding the classification of cash flows related to variation margin calls on ‘collateralised-to-market’ contracts. If the IASB does not object to the agenda decision, it will be published in February 2025.
Other tentative decisions by IFRIC include:
- Application of IAS 29 Financial Reporting in Hyperinflationary Economies in assessing indicators of hyperinflationary economies – IFRIC concluded that there is little diversity in understanding the requirements for assessing when an economy becomes hyperinflationary and decided not to add a standard-setting project to its work plan.
- Recognition of intangible assets arising from climate-related commitments – Given that the IASB has a project on pollutant pricing mechanisms (PPMs) on its reserve list, some of which involve carbon credits, IFRIC decided not to add a separate standard-setting project on the accounting for carbon credits.
IFRIC’s podcast in relation to the above matters can be accessed through the IFRS website.
The IASB met on the 9th and 11th of December 2024 to discuss targeted refinements to its proposals for inclusion in an exposure draft of IFRS Practice Statement 1 Management Commentary. The Board decided to proceed with issuing the revised Practice Statement without re-exposing its proposals.
The Board also considered stakeholder feedback on proposed amendments to IFRS 3 Business Combinations in the Exposure Draft Business Combinations—Disclosures, Goodwill and Impairment. No decisions were made, and deliberations will continue in future meetings.
A podcast episode discussing the highlights of this meeting is available on the IFRS website.
In case you missed it
The IFRS Foundation released a new comprehensive guide to assist organisations in identifying and disclosing material sustainability-related risks and opportunities.
The guide focuses on how these risks and opportunities can arise from a company’s dependencies and impacts on various resources and relationships such as human, intellectual, financial, natural, manufactured and social resources across its value chain.
It also provides practical guidance on using a materiality assessment process, similar to that used for financial reporting, to identify and disclose relevant sustainability information.