Developing GPFS-Tier 3 proposal

Having finalised the new for-profit private sector Australian financial reporting framework (effective for financial years beginning on or after 1 July 2021), the Australian Accounting Standards Board (AASB) has now turned its attention to the not-for-profit (NFP) private sector Australian financial reporting framework. To shape the NFP private sector financial reporting framework, the AASB is seeking to:

  • remove the ability for NFP private sector entities to prepare special purpose financial statements.
  • develop a third tier of general purpose financial statements (GPFS) for certain smaller NFP private sector entities.

In September 2022 the AASB published its Discussion Paper – Development of Simplified Accounting Requirements (Tier 3 Not-for-Profit Private Sector Entities) being the first step in revising the NFP private sector financial reporting framework. 

Discussion Paper (DP) proposes a third tier of GPFS for the NFP private sector. The DP proposes developing a stand-alone accounting standard for GPFS-Tier 3 containing simplified accounting and disclosure requirements for smaller NFP private sector entities.


Discussion paper key proposals

The DP proposes developing a stand-alone accounting standard containing the accounting requirements for smaller NFP private sector entities – a third form of GPFS: GPFS-Tier 3. These proposals are aimed at providing simpler accounting requirements while improving the comparability and quality of financial reporting, and at the same time reducing costs for these smaller NFP private sector entities.

Unlike GPFS-Tier 2, GPFS-Tier 3 will include concessions for some recognition and measurement requirements of Australian Accounting Standards. Disclosures will also be simplified.

Some of the key proposals include:

  • simpler income recognition requirements
  • choice whether to consolidate controlled entities
  • all leases to be ‘off-balance sheet’
  • choice of whether to record donated assets at cost or fair value
  • fair value gains and losses on financial assets to be recorded through other comprehensive income profit or loss.

Next steps

A Discussion Paper is a step prior to the issue of an Exposure Draft in the AASB’s Due Process. The views expressed in this DP are preliminary and may change. The AASB will consider the comments received in response to the DP before deciding whether to develop an Exposure Draft containing proposals to implement any or all of its preliminary views.

Comments on the DP are open until 31 March 2023.

Read more in our Reporting Update.


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