The Australian Securities and Investments Commission (ASIC) today announced Class Order 04/0967, which provides short term relief from any requirement for financial reports of registered schemes that are disclosing entities to reveal remuneration paid directly or indirectly to directors and executives of their responsible entities.

The Class Order covers financial years and half-years ending 30 June 2004 up to, but not including, 30 September 2004. The Order was made following a request by the Australian Accounting Standards Board (AASB) for relief from any relevant disclosure requirement of accounting standard AASB 1046 ‘Director and Executive Disclosures by Disclosing Entities’ (AASB 1046).

A media release issued by the AASB on 21 June 2004 stated that, in their view, AASB 1046 and s.285(3)(b) of the Corporations Act 2001 (the Act) together required disclosure of certain remuneration in registered scheme financial reports.

In applying Chapter 2M of the Act, s.285(3)(b) requires the directors and officers of the responsible entity be treated as the directors and officers of the scheme. The AASB is of the view that this means any remuneration paid indirectly to specified directors and specified executives of the responsible entity, through management fees, must be disclosed.

Where a responsible entity has more than one managed investment scheme, the AASB said that the cost of remuneration of specified directors and specified executives must be allocated on an appropriate basis to each scheme. Where the responsible entity considers allocation on a meaningful basis impossible, the full remuneration of each person should be disclosed.

In AASB Action Alert No.76 of July 2004, the AASB said ‘The Board was sympathetic to the problems arising because IFSA ( ‘Investment and Financial Services Association Limited’) members had become aware of the applicability of AASB 1046 so close to the end of the financial year’.

The relief is specific to the current circumstances and ASIC will not consider any extension of the relief. Further, ASIC does not set the accounting standards and the Class Order should not be considered a precedent for relief from the general application of other accounting standards, such as the new standards based on International Financial Reporting Standards.

The Class Order does not provide relief to registered schemes that are not disclosing entities in relation to AASB 1017 ‘Related Party Disclosures’. Paragraphs 139 to 143 of ASIC Practice Note 68 ‘New Financial Reporting and Procedural Requirements’ outline ASIC’s view that AASB 1017 does not require similar disclosures by such schemes.

Copies of the class order are available from the ASIC website: www.asic.gov.au.

End of release

Download a copy of:

• Class Order [CO 04/0967]
• Practice Note 68 ‘New Financial Reporting and Procedural Requirements’