Here's what you need to do.
When you are analysing the effect of the new revenue and income standards for not-profit entities, you should make sure you are considering all the relevant standards, including amendments. The major amendments to AASB 15 and AASB 1058 as at 31 December 2018 are listed below, with links provided.
Are you using the correct versions of AASB 15 and AASB 1058?
AASB 15 Revenue from Contracts with Customers has been modified by the Australian Accounting Standards Board (AASB) for not-for-profit (NFP) sector requirements. AASB 1058 Income of Not-for-Profit Entities has also been amended since it was first issued.
Are you using the correct versions?
You didn’t know there were different versions?
Well, it is a trick question. At the time of writing (early January 2019), there was no version of AASB 15 on the AASB website that included the not-for-profit modifications*. What this has meant is that many public sector NFP entities have not adequately considered the NFP modifications and have not correctly applied the modifications to their circumstances. This may result in incorrect conclusions when applying AASB 15.
Similarly, at the time of writing, AASB 1058 had not been updated for the changes for valuing concessionary leases (also referred to as peppercorn leases), potentially causing undue cost and effort if amendments are not considered.
Why are there different versions?
Accounting standards are often amended. This makes it difficult to work out which version of the standard you need to use. In Australia, amendments are handled by issuing an amending accounting standard, that uses a numbering system of the year it was issued, and a sequential number, for example, AASB 2016-8.
To deal with the different versions, the AASB will periodically publish ‘compiled’ versions of accounting standards on its website. The compiled version will indicate which amendments at that time have been, or have not been, compiled into the version. The amending standards that have not been complied into the main standard are also listed on the AASB website.
Compiled versions of AASB 15
The latest compiled version of AASB15 (dated December 2016) is for-profit focused and includes:
- the original AASB 15 (without NFP guidance) issued in December 2014 (based on the original IFRS 15 issued by the IASB)
- amendments from AASB 2015-8 that deferred the commencement date for for-profit entities until 1 January 2018
- amendments from AASB 2016-3 that are the equivalent of the IASB’s clarifications to IFRS 15
- amendments from AASB 2016-7 that deferred the commencement date for NFP entities until 1 January 2019.
What’s not in the December 2016 compiled version of AASB 15
The latest compiled version does not include the following NFP modifications:
- amendments from AASB 2016-8 that includes implementation guidance for NFPs
- amendments from AASB 2018-4 that deal with public sector entities issuing licences.
AASB2016-8 are the really important amendments for AASB 15 for NFP entities. The amendments include:
- Appendix F giving implementation guidance, such as how to apply the concept of contract in the NFP environment (that is, enforceable agreement), and applying the concept of ‘sufficiently specific’
- illustrative examples (don’t forget to also look at the illustrative examples in AASB 1058)
- amendments to AASB 9 Financial Instruments for statutory receivables, for example taxes and fines. For councils, these amendments also include rates and infrastructure charges.
What’s not in the December 2016 compiled version of AASB 1058
This version does not include the important deferral of the mandatory fair valuation of concessionary (peppercorn) leases introduced by AASB 2018-8. If you have these leases, it is important that you consider these amendments.
Searching for standards by reporting period
The AASB website allows you to search for an accounting standard by reporting period, for example, AASB 15 for the reporting period beginning 1 January 2019 (or say, 1 July 2019).
The website does not compile the latest version ‘on the fly;’ it provides the latest compiled version (that is, December 2016).
*Since publication, the AASB has issued an updated compilation for AASB 15 including the relevant not-for-profit modifications. However, as at 31 January 2019, an updated version of AASB 1058 had not been published.