AASB 18: financial statement presentation changes coming from Jan 2028

There are a series of announcements from the Australian Accounting Standards Board (AASB) that will see changes in the presentation of (audited) financial statements for all non-profit organisations, and for some organisations, changes in how the accounts are prepared.

1. The first change is to AASB 18, which is set to replace AASB 101. This will change how financial performance is presented and disclosed in audited financial statements. The purpose is to improve consistency and comparability. In practical terms, this means audited financial statements will need to follow a more structured approach to presenting income and expenses, including defined subtotals.
   
   For non-profit entities, AASB 18 applies to annual reporting periods beginning on or after 1 January 2028. For organisations operating to a financial year, the first audit where the new report presentation will apply will be that of 30 June 2029. While this is some time away, it’s worthwhile considering the changes ahead of time.
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2. A separate but related development concerns the future of special-purpose financial statements. The AASB issued AASB 2026-2, which will limit the ability of certain not-for-profit entities to prepare special-purpose financial statements. These changes apply to annual reporting periods beginning on or after 1 July 2029, with earlier application permitted.
   
   For affected organisations, moving from special-purpose to general-purpose financial statements may change the basis of preparation and disclosures. Where an organisation’s existing accounting policies do not comply with the new requirements, the transition may also affect how it accounts for particular income, expenses, assets and liabilities.
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3. A third, related initiative from the AASB is the Tier 3 financial reporting standards. These are designed for small and medium sized organisations (which the AASB calls Tier 3). The standard (AASB 1061) provides options for organisations to apply a simplified approach to some of the most complex areas of accounting. Whilst the AASB has done its part, we are waiting on the regulator to confirm what constitutes a Tier 3 organisation (likely to be a turnover measure, or similar). The standard again applies from 1 July 2029, with earlier application permitted.

Stemming from the various reforms there maybe implications for organisations, including the need to review chart of accounts structures; map existing reporting lines to the categories; consider whether regular Board report packs need to change; update accounting policies; and ensure Finance Teams understand the new presentation requirements.

If you’re thinking there’s a lot to digest, then you’re absolutely right! But we have time, and together we will simply take it step by step. We’ll continue to monitor further developments and collaborate with our clients to understand the changes and implement any accounting transitions.