media release (16-442MR)

Companies need to respond to major new accounting standards


Three new accounting standards coming into force over the next two years are expected to have the greatest impact on financial reporting since the adoption of International Financial Reporting Standards (IFRS) in 2005. 

For some companies, the impact on their reported results will be even more significant than was the case with the adoption of IFRS.

ASIC Commissioner John Price said, 'We remind directors and management of the importance of planning for the new standards and informing investors and other financial report users of the impact on reported results.'

The new standards can significantly affect reporting of revenue, values of financial instruments, loan loss provisions, and the impact of lease arrangements.

The three major accounting standards being introduced for future financial years (early adoption is permitted) are:

  • AASB 9 Financial Instruments (applies from years commencing 1 January 2018);
  • AASB 15 Revenue from Contracts with Customers (applies from years commencing 1 January 2018);  and
  • AASB 16 Leases (applies from years commencing 1 January 2019).

'Given the extent of the changes to financial reporting, it is important to determine the extent of any impact now and to put in place implementation plans for these new standards. Public disclosure on the impact of the standards and timely implementation is important for investors and to retain market confidence,' Mr Price said.

Matters to consider for any implementations plans may include required system changes, business impacts, impacts on compliance with financial requirements, disclosures required in financial reports prior to the effective dates of the standards, possible continuous disclosure obligations, and the impact on any fundraising or other transaction documents.  These issues are covered in more detail in the attachment to this release.

ASIC has highlighted the need to disclose the impacts of the new standards in 31 December 2016 financial reports in Media Release 16-428MR ASIC calls on preparers to focus on useful and meaningful financial reports.

Attachment to MR 16-442MR – Companies need to respond to major new accounting standards

Matters to consider

We remind preparers of financial reports to address matters such as:


  • Determining whether and how new standards will impact on their future reports, and developing implementation plans.  Directors and management should ensure that progress is monitored against plans and action taken where milestones are not met.
  • Identifying system, process, and any associated internal control changes needed to produce information required under the new standards, including related disclosures.
  • Determining the impact on compliance with financial condition requirements (e.g. loan covenants and regulatory capital requirements), future tax liabilities, the ability to pay dividends, and employee incentive schemes.


  • Providing required disclosure in the notes to financial statements prior to the effective date of the new standards regarding known or reasonably estimable information relevant to assessing the possible impact that adoption of the new standards will have on the issuer’s future financial statements.

It is reasonable for the market to expect that quantitative information will be available and disclosed for the reporting date that coincides with the start of the first comparative period that will be affected in a future financial report.  Information that there will be no material impact may also be important information for the market.

  • Providing adequate information to the market on the company’s preparedness and the possible financial impact in accordance with any continuous disclosure obligations;
  • Providing appropriate disclosure of the future impact of the new standards in fundraising and other transaction documents.  Companies should consider how much prominence is given to financial information presented under the pre-existing standards and under the new standards having regard to:
    • proximity to the first financial report under the new standards;  and
    • the size and extent of the impact of applying the new standards.

Consideration should be given to matters such as:

  • presenting past and prospective financial information in a document on a consistent basis or presenting information on both bases for an overlap period
  • ensuring impacts on historical financial statement information are presented clearly by general discussion, reconciliations of key items such as profit and net assets, and/or line-by-line reconciliations for one or more years.  More detailed information and quantification may be required closer to the date of adopting the new standards in financial reports
  • disclosing key assumptions made when applying the new standards to forecast information;  and
  • clearly identifying whether the old or new standards have been applied to particular information.

Auditors should be mindful of their responsibilities in the context of opining on financial reports, including any note disclosures.  To maintain their independence, auditors should not be implementing new standards or advising on accounting treatments for their clients.

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