AASB 132-Financial Instruments: Presentation-August 2015 [F2015L01605]-Concluded matters [2015] AUSStaCSDLM 257 (2 December 2015)

Instrument	AASB 132 - Financial Instruments: Presentation - August 2015 [F2015L01605]
Purpose	Reissues accounting standards for financial instruments and replaces previous versions of the standard
Last day to disallow	3 December 2015
Authorising legislation	Corporations Act 2001
Department	Treasury
Scrutiny principle	Standing Order 23(3)(a)
Previously reported in	Delegated legislation monitor No. 14 of 2015

Incorporation by reference

The committee commented as follows:

Section 14 of the Legislative Instruments Act 2003 allows for the incorporation of both legislative and non-legislative extrinsic material into instruments either as, respectively, in force from time to time or as in force at a particular date (subject to any provisions in the authorising legislation which may alter the operation of section 14).

With reference to the above, the committee notes that various items of this instrument refer to other accounting standards. For example, the instrument states:

Australian Accounting Standard AASB 132 Financial Instruments: Presentation is set out in paragraphs 1 – Aus100.2 and the Appendix. All the paragraphs have equal authority. Paragraphs in bold type state the main principles. AASB 132 is to be read in the context of other Australian Accounting Standards, including AASB 1048 Interpretation of Standards, which identifies the Australian Accounting Interpretations, and AASB 1057 Application of Australian Accounting Standards. In the absence of explicit guidance, AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors provides a basis for selecting and applying accounting policies.

However, neither the text of the instrument nor the ES expressly state the manner in which the accounting standards referred to are incorporated.

The committee's usual expectation where an instrument incorporates extrinsic material by reference is that the manner of incorporation is clearly specified in the instrument and, ideally, in the ES. The committee regards this as a best-practice approach that enables anticipated users or persons affected by any such instrument to understand its operation without the need to rely on specialist legal knowledge or advice, or consult extrinsic material.

The committee requests the advice of the minister in relation to this matter.^[1]

Minister's response

The Assistant Minister to the Treasurer advised:

In my opinion AASB 132 is consistent with the current practice adopted for the full suite of legislative instruments:

• The Accounting Standards referred to in AASB 132 are all disallowable legislative instruments, made under section 334 of the Corporations Act 2001;

• Under section l4(l)(a) of the Legislative Instruments Act 2003 (LIA), a legislative instrument may make provision in relation to a matter by "applying, adopting or incorporating, with or without modification, the provisions of any Act, or of any disallowable legislative instrument, as in force at a particular time or as in force from time to time".

• Under section 10(a) of the Acts Interpretation Act 1901 (AIA), where an Act contains a reference to a short title for the citation of another Act as originally enacted, or of another Act as amended, then the reference is to be construed as a reference to that other Act as originally enacted and as amended from time to time;

• Under section 13(1)(a) of the LIA, the AIA applies to a legislative instrument (such as AASB 132 and the incorporated Accounting Standards) as if it were an Act;

• Therefore, the references in AASB 132 to the titles of Standards that are legislative instruments:

• are to be construed as references to those other Standards as originally made and as amended from time to time; and

• are effective in incorporating provisions of those Standards as in force from time to time, without further specification in AASB 132, for the purposes of section 14(1)(a) of the LIA.

• The Australian Accounting Standards Board (AASB) staff have consulted with the Office of Parliamentary Counsel, which confirms that in not expressly stating that the "incorporated" Standards are incorporated as in force from time to time, AASB 132 is drafted consistently with the long-standing practice adopted by the Office of Parliamentary Counsel in drafting regulations and other legislative instruments that refer to other disallowable legislative instruments (including regulations).

Further, the Assistant Minister to the Treasurer provided:

...the AASB has also indicated that in future, an explanation could be included in Explanatory Statements for Standards that other Standards were incorporated as in force from time to time to assist readers.

Committee's response

The committee thanks the Assistant Minister to the Treasurer for his response and has concluded its examination of the instrument.

Noting that various items of this instrument refer to other accounting standards as in force from time to time, the committee thanks the Assistant Minister to the Treasurer for his undertaking that where future Standards incorporate other Standards, the manner of incorporation will be specified to assist readers and users of the instrument.

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[1] The committee notes that the issue raised also applies to a number of recent standards including: AASB 12 - Disclosure of Interests in Other Entities - August 2015 [F2015L01536]; AASB 107 - Statement of Cash Flows - August 2015 [F2015L01538]; AASB 108 - Accounting Policies, Changes in Accounting Estimates and Errors - August 2015 [F2015L01565]; AASB 117 - Leases - August 2015 [F2015L01562]; AASB 128 - Investments in Associates and Joint Ventures - August 2015 [F2015L01543]; AASB 127 - Separate Financial Statements - August 2015 [F2015L01544]; AASB 129 - Financial Reporting in Hyperinflationary Economies - August 2015 [F2015L01550]; AASB 110 - Events after the Reporting Period - August 2015 [F2015L01553]; AASB 134 - Interim Financial Reporting - August 2015 [F2015L01557]; AASB 138 - Intangible Assets - August 2015 [F2015L01558]; AASB 116 - Property, Plant and Equipment - August 2015 [F2015L01572] ;AASB 120 - Accounting for Government Grants and Disclosure of Government Assistance - August 2015 [F2015L01576];AASB 121 - The Effects of Changes in Foreign Exchange Rates - August 2015 [F2015L01580]; AASB 123 - Borrowing Costs - August 2015 [F2015L01586]; AASB 3 - Business Combinations - August 2015 [F2015L01592]; AASB 112 - Income Taxes - August 2015 [F2015L01601]; AASB 2 - Share-based Payment - July 2015 [F2015L01603]; AASB 132 - Financial Instruments: Presentation - August 2015 [F2015L01605]; AASB 8 - Operating Segments - August 2015 [F2015L01606]; AASB 137 - Provisions, Contingent Liabilities and Contingent Assets - August 2015 [F2015L01607]; AASB 6 - Exploration for and Evaluation of Mineral Resources - August 2015 [F2015L01608]; AASB 139 - Financial Instruments: Recognition and Measurement - August 2015 [F2015L01609]; AASB 7 - Financial Instruments: Disclosures - August 2015 [F2015L01610]; AASB 140 - Investment Property - August 2015 [F2015L01611]; AASB 119 - Employee Benefits - August 2015 [F2015L01612]; AASB 13 - Fair Value Measurement - August 2015 [F2015L01613]; AASB 5 - Non-current Assets Held for Sale and Discontinued Operations - August 2015 [F2015L01614]; AASB 141 - Agriculture - August 2015 [F2015L01615]; AASB 133 - Earnings per Share - August 2015 [F2015L01616]; AASB 10 - Consolidated Financial Statements - July 2015 [F2015L01617]; AASB 124 - Related Party Disclosures - July 2015 [F2015L01621]; AASB 136 - Impairment of Assets - August 2015 [F2015L01622]; AASB 4 - Insurance Contracts - August 2015 [F2015L01623]; AASB 102 - Inventories - July 2015 [F2015L01624]; AASB 101 - Presentation of Financial Statements - July 2015 [F2015L01626]; AASB 11 - Joint Arrangements - July 2015 [F2015L01627]; AASB 1 - First-time Adoption of Australian Accounting Standards - July 2015 [F2015L01628]; AASB 1048 - Interpretation of Standards - August 2015 [F2015L01618]; and AASB 1057 - Application of Australian Accounting Standards - July 2015 [F2015L01620].