Welcome to “Beyond the numbers“, our monthly newsletter which brings you a summary of the latest developments from local and international standard setters and regulators.
Top story
Following a surveillance review by ASIC, a large proprietary company has restated the comparative figures in its 2024 financial report. The restatement arose from a failure to consolidate its 45.6% shareholding in an ASX-listed entity, despite indicators of control.
Restatement of the FY23 comparatives resulted in an increase in net assets of $129.8 million and profit after tax by $13.5 million, and a decrease in net cash outflows of $72.4 million.
ASIC continues to stress the importance of properly assessing control and the consolidation requirements of AASB 10 Consolidated Financial Statements.
Local reporting
The Australian Accounting Standards Board (AASB) made the following decisions at its October 2025 Board meeting:
- Remove the restriction that transitional relief under Tier 2 Simplified Disclosures only applies to early adopters of the relevant Amending Standard. All other proposed amendments to AASB 1053, as outlined in ED 334 Limiting the Ability of Not-for-Profit Entities to Prepare Special Purpose Financial Statements, will be finalised.
- Subject to some exceptions, finalise the following sections of the proposed Tier 3 framework for NFP private sector entities: financial instruments, revenue recognition, related party disclosures, and transition guidelines.
At its October 2025 meeting, the AASB approved the publication of the Exposure Draft Operating Cash Flow Reconciliation and Application of AASB 18 and AASB 107 by Superannuation and Not-for-Profit Entities.
Key proposed amendments include:
- Requiring superannuation entities applying AASB 1056 Superannuation Entities to present and classify expenses under that standard rather than AASB 18 Presentation and Disclosure in Financial Statements.
- NFP entities in the private and public sector to consider user information needs in the Conceptual Framework instead of considering what line items provide the most useful information about the main components or drivers of the entity’s profitability as set out in AASB 18.
- NFP public sector entities, including governments, may elect not to classify income and expenses by activity, apply certain AASB 18 paragraphs, or disclose management-defined measures.
- AASB 107 Statement of Cash Flows to permit superannuation entities and NFP public sector entities to classify interest and dividends as operating cash flows and allow profit or loss totals as the starting point for indirect cash flow reconciliations.
The Exposure Draft is expected to be published shortly, with a 120-day comment period.
Regulations
ASIC has published FAQs clarifying the requirements for the review or audit of sustainability reports. The guidance explains when a sustainability report must be reviewed or audited, who is eligible to perform these engagements, and the applicable standards. It also outlines the required level of assurance and auditors’ reporting obligations.
The FAQs clarify that the auditor of the sustainability report (whether an individual auditor, audit company or audit firm) is not required to be the same as the auditor of the annual financial report.
The Treasury Laws Amendment (Strengthening Financial Systems and Other Measures) Bill 2025 was introduced into Parliament on 4 September 2025.
Schedule 4 (Division 2) of the Bill proposes to clarify that the modified liability protections relating to the preparation of a sustainability report extend to those prepared on a voluntary basis (e.g. where a report not required under section 292A of the Corporations Act 2001).
For the amendments to become law, the Bill must pass both Houses of Parliament and receive Royal Assent.
The Australian Charities and Not-for-profits Commission (ACNC) has released its regulatory focus areas for the 2025–26 financial year.
Key priorities include:
- Effective record-keeping of financial and operational records: The ACNC provides a range of guidance materials, checklists, and examples to support charities of all sizes in maintaining transparency and strong record-keeping practices.
- Charities at risk of misuse for money laundering or the financing of terrorism: The ACNC has developed specific guidance and a checklist to help charities identify and manage risks related to money laundering and terrorism financing.
ASIC has reissued Regulatory Guide 34 on auditors’ obligations to report known or suspected contraventions of the Corporations Act 2001 to ASIC.
Key updates include, among others:
- Expansion of reportable matters relating to sustainability reports;
- Inclusion of CCIVs in financial reporting and compliance plan obligations; and
- Extension of auditor reporting obligations to include retail superannuation entities (RSEs).
Sustainability
The AASB S2 Implementation Advisory Panel (IAP) met in September 2025 to discuss the practical challenges of applying AASB S2 Climate-related Disclosures.
The IAP emphasised the importance of clear guidance on applying judgement to disclosure requirements, particularly around quantifying financial effects, scenario analysis, and Scope 3 greenhouse gas emissions. The AASB reaffirmed its intention to align future industry-based disclosure requirements with the SASB Standards by 2030, in line with Treasury’s policy.
Preparers are encouraged to check the AASB Knowledge Hub for the latest support materials.
The AASB has released new staff guidance clarifying how proportionality mechanisms in AASB S2 can be applied to climate-related financial disclosures. The paper outlines how entities, particularly smaller or less complex ones, can use judgement to scale their disclosures subject to resourcing constraints, as well as data and specialist’s availability.
AASB S2 contains two key proportionality mechanisms:
- To use all reasonable and supportable information that is available to the entity at the reporting date without undue cost or effort; and
- Disclosures that are commensurate with the skills, capabilities and resources that are available to the entity.
The AASB emphasises that these proportionality mechanisms do not exempt entities from making disclosures, nor do they introduce any additional reporting requirements.
To support entities in meeting the new climate-related reporting requirements, the AASB has published educational material that clarifies the disclosure obligations for greenhouse gas (GHG) emissions under AASB S2.
The resource aims to clarify the technical aspects of GHG reporting, including disclosures related to gross versus net GHG emissions targets, value chain considerations, and the application of proportionality mechanisms.
Chartered Accountants Australia and New Zealand (CA ANZ) has launched a suite of guides to help preparers for mandatory Climate-related Disclosures under AASB S2 (and voluntary disclosures under AASB S1). The guides cover key areas including climate reporting roadmaps, materiality, Scope 3 emissions, scenario analysis, and transition planning.
Tailored for Australian entities but globally relevant, these resources provide practical insights to support early engagement and alignment with international standards.
IFRS developments
The International Accounting Standards Board (IASB)’s September 2025 meeting covered several key projects, including:
- Amortised cost measurement under IFRS 9: The Board continued work on clarifying the accounting for subsequent changes to the effective interest rate.
- Provisions – Targeted Improvements (IAS 37): Redeliberations continued on proposed amendments to IAS 37, including refining the criteria for recognising provisions and updating measurement requirements. The Board tentatively decided to retain the proposal to require an entity to discount a provision using a risk-free rate with no adjustment for the effect of non-performance risk.
- Equity Method: The IASB reviewed stakeholder feedback on proposed amendments to IAS 28 and decided that further decisions will be deferred to early 2026.
- Business Combinations – Disclosures, Goodwill and Impairment: The Board continued to deliberate feedback on the exposure draft but did not make any decisions.
- Statement of Cash Flows and Related Matters
The Board addressed classification and presentation issues, considering whether to revise the definition of operating activities and how to better reflect cash flows from financing and investing activities.
A podcast episode summarising the highlights of this meeting is available on the IFRS YouTube channel.
The IFRS Interpretations Committee (IFRIC) met on 16 September 2025 and reached the following tentative agenda decisions:
- Classification of an exchange difference from intragroup loans under IFRS 18: The Committee concluded that foreign exchange differences on intragroup loans eliminated on consolidation may be classified either in the operating category by default or in the same the category of the related income and expenses before their elimination on consolidation. No separate standard-setting work plan will be added for this matter.
- Economic benefits from use of a battery under an offtake arrangement (IFRS 16): The Committee noted that, in the particular fact set described, the entity had the right to direct the use of the battery and, therefore, IFRS 16 applies. No separate standard-setting project will be added.
Other matters discussed include:
- Business Combinations – Disclosures, Goodwill and Impairment: Input was provided on the IASB’s ongoing project, particularly regarding enhanced disclosure requirements and improvements to goodwill and impairment testing.
- Statement of Cash Flows: The Committee reviewed feedback on the classification and presentation of cash flows, aiming to address diversity in practice and improve the usefulness of cash flow statements.
The Committee will continue its discussions on these topics at future meetings.
In case you missed it
The Australian Securities and Investments Commission (ASIC) has ramped up its focus on large proprietary companies that lost their grandfathered exemption in 2022 but have failed to lodge audited financial reports.
A recent review highlighted widespread non-compliance by previously grandfathered companies, prompting ASIC to initiate broader surveillance focused on non-lodgement of financial reports by large proprietary companies.
ASIC advises companies to proactively review their financial reporting obligations and address any instances of non-compliance before ASIC begins the surveillance. Non-compliance may result in regulatory action, including penalties or legal proceedings.