ASIC published a media release on 16 December 2016 highlighting the need for action on three major new accounting standards. The three standards are:
AASB 9 Financial Instruments (applies from years commencing 1 January 2018)
AASB 15 Revenue from Contracts with Customers (applies from years commencing 1 January 2018)
AASB 16 Leases (applies from years commencing 1 January 2019).
ASIC’s comments highlight the significant impact that these standards are expected to have for virtually all financial statement preparers, and the need for appropriate disclosure of their impact within financial statements. In particular, ASIC noted that “It is reasonable for the market to expect that quantitative information will be available and disclosed for the reporting date that coincides with the start of the first comparative period that will be affected in a future financial report.” This is 31 December 2016 for companies with a December year-end.
Ralph Martin, RSM's Technical Director, commented on ASIC's media release:
“ASIC is effectively saying that the time for inaction or procrastination is over. They expect Directors and management to be putting in place an implementation approach for these new standards, and to be able to provide disclosure to the market about the progress that they have made.
“The clear implication of their comments is that a statement in the financial statements that ‘we have not yet assessed the impact of the new standards’ is no longer considered good enough. They expect companies to have a transition plan, and to set out that plan in their financial statements. Where there is likely to be a financial impact as a result of these standards, that should be quantified. I would encourage all preparers to consider this area as a matter of urgency, and, where appropriate, discuss it with their professional advisers.”