Ten things to remember for 30 June 2024 annual and half-year reporting

This article highlights ten things to remember when preparing 30 June 2024 financial statements. Entities should also consider ASIC’s recently announced focus areas for its surveillance of 30 June 2024 financial reports, as well as continuing global geopolitical and economic uncertainty, including the impact of interest rate increases and inflation, and the effects those uncertainties might have when accounting for various items in your financial statements.

Not-for-profit entities (NFPs) should consider the above matters where relevant. There are no new not-for-profit specific standards applying at 30 June 2024 for the first time. However, some NFPs must present a consolidated entity disclosure statement for the first time, and we remind charities preparing special purpose financial statements that related party and key management personnel disclosures must be provided.

For annual periods ending from 30 June 2024, public companies (listed and unlisted) will have to include a ‘consolidated entity disclosure statement’ (statement) in their annual financial report, resulting in more information disclosed about each subsidiary and their tax residency at the end of the financial year. The directors will also have to declare that this information is ‘true and correct’, and the Chief Executive Officer and the Chief Financial Officer declaration for listed groups will have to do the same. Companies limited by guarantee reporting under Chapter 2M of the Corporations Act 2001, rather than the Australian Charities and Not-for-profits Commission Act 2012, must also prepare this new statement.

Public companies that don’t have subsidiaries, or those not required to prepare consolidated financial statements by AASB 10 Consolidated Financial Statements must still prepare the statement, although it will be brief. The statement will be subject to audit.

The new disclosures are part of the Government’s response to enhance scrutiny of multinational companies and how they structure their tax arrangements via their subsidiaries operating in different jurisdictions.

Start preparing as soon as possible. Streamline group structures, where possible, before 30 June, and ensure all subsidiaries are identified and documented, including their tax residencies. Our previous article provides more detail.

Entities need only disclose material accounting policy information in their 30 June 2024 financial statements. This also applies to Tier 2 entities preparing financial statements using the Simplified Disclosures. Changes to AASB 101 Presentation of Financial Statements means that the long laundry list of accounting policies, which merely repeat recognition and measurement requirements from the accounting standards, can be removed. Our article explains what accounting policy information is material and what is not.

Keeping immaterial accounting policies is a big time waster both for preparers and auditors. Culling unnecessary accounting policies in June 2024 financial reports is a good investment - a little time spent now will deliver time savings in the future.

These changes apply to annual periods beginning on or after 1 January 2024, so already apply to entities preparing 30 June 2024 half-year financial statements. In addition, Tier 1 entities preparing 30 June 2024 annual financial statements must disclose the effect of these amendments on the classification of liabilities as required by AASB 108, paragraph 30. This includes describing and quantifying the impact in your 30 June 2024 financial statements because comparatives will have to be restated.

Classifying your liabilities may be impacted by one or more of the changes to AASB 101 Presentation of Financial Statements, namely:

  • The right to defer settlement need not be unconditional and must exist at the end of the reporting period
  • Classification is based on rights to defer, not intention
  • Early conversion options for convertible notes that can be settled before maturity by issuing the entity’s own equity instruments will result in the underlying liability being classified as CURRENT if the conversion feature is classified as a liability/derivative liability rather than as equity.  

Regarding a., if your entity has loan arrangements subject to covenants, the amendments clarify when the covenants affect classification at the reporting date. This is illustrated in the diagram below.

Changes to classification requirements for liabilities

Assessing whether the entity must comply with a loan covenant before the reporting date may depend upon whether bankers have provided a ‘waiver’ or a ‘period of grace’. Our publication uses a flowchart and examples to help you determine the correct classification of your loan arrangements.

With the Australian Government committed to reducing Australia’s greenhouse gas emissions by 43% below 2005 levels by 2030, and achieving net zero emissions by 2050, preparers need to consider the implications of climate-related matters when preparing 30 June 2024 financial statements. Educational materials published by the International Accounting Standards Board (IASB) summarise how companies must consider climate-related issues when applying IFRS® Accounting Standards. This includes when determining values for assets, liabilities, and provisions, and making disclosures regarding estimates and judgements. Please refer to our publication for a summary of these educational materials. ESMA’s ‘Heat is On’ Report also provides real-life, practical examples to illustrate how entities can improve their climate-related disclosures for areas where climate matters are likely to have the greatest impact. Our article contains more information on this. More resources on sustainability matters are available on our sustainability reporting web page.

Australian listed entities should also note that the Australian Securities Exchange (ASX) and the Australian Securities and Investments Commission (ASIC) expect disclosure of climate-related risks and opportunities using the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD) recommendations. This applies to the Corporate Governance Statement and the Operating and Financial Review.

For annual reporting periods ending 30 June 2024, insurers, and non-insurers entering into insurance contracts must apply the new insurance standard, AASB 17 Insurance Contracts, for the first time. All entities must ensure they comply with the new rules regarding disclosing material accounting policy information, and accounting for deferred tax related to assets and liabilities that arise in a single transaction – this mainly affects leases and restoration provisions. Lastly, country-by-country reporting entities also need to take note of mandatory exemptions for deferred tax relating to Pillar Two income taxes and additional disclosures.

The table below summarises the new standards that will apply for the first time to 30 June 2024 annual periods. Please refer to the listed resources for more information or contact our IFRS & Corporate Reporting team for assistance.

Standard number

Topic

Resources

AASB 17

Insurance Contracts

Web site

AASB 2021-2 (amendments to AASB 101)

Disclosure of accounting policies and definition of accounting estimates

Expect to see a reduction in the amount of accounting policy disclosures

IASB clarifies how to distinguish between a change in accounting policy and a change in accounting estimate

AASB 2021-6 (amendments to AASB 1060) 

Disclosure of accounting policies (Tier 2)

Expect to see a reduction in the amount of accounting policy disclosures

AASB 2021-5 (amendments to AASB 112)

Deferred tax related to assets and liabilities arising from a single transaction

IASB clarifies accounting for deferred taxes relating to assets and liabilities arising from a single transaction (leases and decommissioning obligations)

How do lessees account for deferred taxes on leases when they have made advance lease payments and incurred initial direct costs?

AASB 2023-2
(amendments to AASB 112)

Pillar Two Model Rules

Pillar Two disclosures in 31 December 2023 interim and annual financial statements - BDO

Note: Please watch this space in July 2024 Corporate Reporting Insights for a final list of countries with substantively enacted legislation at 30 June 2024

AASB 2023-4
(amendments to AASB 1060)

Pillar Two Model Rules (Tier 2)

Simplified Disclosure introduced about International Tax Reform – Pillar Two Model Rules

Please ensure you have considered the impact of these standards in your 30 June 2024 annual financial statements.

The following standards apply for the first time for annual periods beginning on or after 1 January 2024, and must be adopted in 30 June 2024 half-year financial statements. Please refer to the resources listed for more information or contact our IFRS & Corporate Reporting team for assistance.

Standard number

Topic

BDO Resources  

AASB 2020-1, AASB 2022-6, AASB 2023-3 (amendments to AASB 101)

Classification of liabilities as current or non-current

Publication

Bulletin

AASB 2022-5 (amendments to AASB 16)

Lease liability in a sale and leaseback

Lease liabilities for sale and leaseback transactions to include variable lease payments that do not depend on an index or rate

AASB 2023-1 (amendments to AASB 107 & AASB 7) 

Supplier finance arrangements

IASB approves changes to the accounting for supplier finance arrangements

How to account for reverse factoring/supply chain financing arrangements

IFRS Interpretations Committee (Committee) agenda decisions are those issues the Committee decided not to take onto its agenda. Although not authoritative guidance, these decisions are regarded as being highly persuasive in practice. All entities reporting under IFRS® Accounting Standards should be aware of these decisions, as they could impact how particular transactions and balances are accounted for. While agenda decisions have no start date, they are expected to be applied as soon as possible, usually by the next reporting date.

Agenda decisions merely clarify existing accounting principles. Therefore, any adjustments required are generally treated as a voluntary change in accounting policy (with retrospective restatement), rather than an error.

Over the past twelve months, the Committee has issued the following agenda decisions:

  • Climate-related commitments (April 2024)
  • Payments contingent on continued employment during handover periods (April 2024)
  • Merger between a parent and its subsidiary in separate financial statements (January 2024)
  • Guarantee over a derivative contract – IFRS 9 Financial Instruments (October 2023)
  • Homes and home loans provided to employees (October 2023)
  • Premiums receivable from an intermediary (IFRS 17 Insurance Contracts and IFRS 9 Financial Instruments) (October 2023)

Please ensure your 30 June annual and half-year financial statements reflect the conclusions in these agenda decisions. You can find more information about these agenda decisions in our previous articles:

Despite a recent spike in inflation, Australia has experienced low inflation levels for decades, and many entities may need to be aware of special accounting requirements when an entity operates in countries whose economy and functional currency are considered hyperinflationary.

When an entity’s functional currency is ‘hyperinflationary’, AASB 129 Financial reporting in hyperinflationary economies requires the financial statements (including any comparative periods) to be stated in terms of the measuring unit current at the end of the applicable reporting period. This is because the currency of a hyperinflationary economy loses a significant amount of purchasing power from period to period, such that presenting financial information based on historical amounts, even if only a few months old, does not provide relevant information to users of financial statements.

Economies which were hyperinflationary as at 31 December 2023

Economies which become hyperinflationary in 2024

Economies that have a risk of becoming hyperinflationary (watchlist for 2024 onwards)

  • Argentina
  • Ethiopia
  • Ghana
  • Haiti
  • Islamic Republic of Iran
  • Lebanon
  • Sierra Leone
  • South Sudan
  • Sudan
  • Suriname
  • Turkey
  • Venezuela
  • Yemen1
  • Zimbabwe

None, however, see Egypt (note 2 below)

  • Angola
  • Burundi
  • Egypt2
  • Lao People’s Democratic Republic
  • Malawi
  • Nigeria
  • Pakistan
  • Sri Lanka
  • Syria

1. Yemen will likely no longer be considered hyperinflationary on 30 June 2024. Continue to monitor based on final future inflation figures.

2. Recent monthly inflation rates remain high – likely Egypt will become hyperinflationary by 31 December 2024.

Entities preparing Tier 1 general purpose financial statements must disclose the anticipated effect of new standards issued, which are not effective at the reporting date (refer to AASB 108, paragraph 30). These are listed in the table below. Please refer to the resources listed for more information or contact our IFRS & Corporate Reporting team for assistance.

Standard number

Topic

BDO Resources  

Effective for annual periods commencing

All entities 

AASB 2020-1, AASB 2022-6, AASB 2023-3 (amendments to AASB 101)

Classification of liabilities as current or non-current

Publication

Bulletin

1 January 2024

AASB 2023-1 (amendments to AASB 107 & AASB 7) 

Supplier finance arrangements

IASB approves changes to the accounting for supplier finance arrangements

How to account for reverse factoring/supply chain financing arrangements

1 January 2024

AASB 2024-1

Supplier finance arrangements: Tier 2 disclosures

This standard applies to Tier 2 entities so is not disclosed by Tier 1 entities complying with AASB 108, paragraph 30

Tier 2 disclosures for supplier finance arrangements

1 January 2024 that end on or after 30 June 2024

AASB 2022-5 (amendments to AASB 16) 

Lease liability in a sale and leaseback

Lease liabilities for sale and leaseback transactions to include variable lease payments that do not depend on an index or rate

1 January 2024

AASB 2023-5

Lack of exchangeability

How to determine the exchange rate when a currency is not exchangeable into another currency

1 January 2025

AASB 18

Presentation and disclosure in financial statements

Publication

1 January 2027

Public sector entities only

AASB 2022-10 (amendments to AASB 13) 

Fair value measurement of non-financial assets of not-for-profit public sector entities

AASB issues long-awaited fair value measurement guidance for not-for-profit public sector entities

1 January 2024

AASB 2022-9

Insurance contracts in the public sector

-

1 January 2026

For years ending 30 June 2024, registrable superannuation entities (RSEs) will have financial reporting obligations similar to those of listed companies under Chapter 2M of the Corporations Act 2001, but with no half-year reporting. These obligations are in addition to their existing obligations to submit quarterly returns to APRA, prepare annual financial statements, have them audited, and lodge them with APRA within three months of the reporting date (i.e. 30 September for the vast majority of the population).

RSEs must now:

  • Prepare a financial report for each financial year, as well as a remuneration report and directors’ report
  • Have the annual financial report and remuneration report audited and obtain a copy of the auditor’s report
  • Lodge the financial report, the directors’ report and the auditor’s report for each financial year with ASIC
  • Keep relevant records to prepare correct financial reports for at least 7 years (5 years for SIS Act 1993)
  • Make financial reports, directors’ reports and auditor’s reports publicly available on the RSE’s website
  • Include details of how to access an RSE’s financial report, directors’ report and auditor’s report for a financial year with a notice to the annual members’ meeting
  • Provide the financial report, directors’ report and auditor’s reports for a financial year to members upon request.

The following articles provide more information:

More information

Our recent webinar contains further useful tips to help you on your 30 June 2024 reporting journey.

We are here to help

Please contact our IFRS & Corporate Reporting team if you need support with any financial reporting matters for your 30 June 2024 financial reports.