Welcome to “Beyond the numbers“, our monthly newsletter which brings you a summary of the latest developments from local and international standard setters and regulators.
Top story
The Australian Government has released draft regulations to increase the financial thresholds used to determine whether a proprietary company is classified as small or large under the Corporations Act 2001.
Under the proposals:
- Consolidated revenue: increases from $50 million to $100 million.
- Consolidated gross assets: increases from $25 million to $50 million.
- Employee threshold: remains at 100 employees.
A proprietary company meeting at least two of the three criteria would be classified as large. The higher thresholds will reduce the number of proprietary companies required to prepare and lodge audited financial reports with the Australian Securities and Investments Commission (ASIC).
The revised thresholds would also determine which companies need to prepare a sustainability report. Proprietary companies and public companies below the revised size thresholds will not be required to prepare a mandatory sustainability report.
If finalised as drafted, the changes will apply to financial years beginning on or after 1 July 2027.
The consultation period closed on 2 November 2026.
Local reporting
The Australian Accounting Standards Board (AASB) met on 29 and 30 October 2026 to discuss several projects that could shape future accounting and sustainability reporting requirements.
Key topics include:
- Proposals to align AASB 1060 to the classification and presentation requirements with AASB 18 Presentation and Disclosure in Financial Statements. This work is particularly relevant to Tier 2 entities preparing for AASB 18.
- Finalisation of an exposure draft to provide implementation guidance for not-for-profit entities on categorising income and expenses under AASB 18 as operating, investing or financing.
Other items included editorial corrections to existing standards and the repeal of superseded amending standards.
The meeting minutes were not yet available when this summary was prepared. The AASB’s post-meeting Action Alert will provide further details of the Board’s decisions and their potential implications.
The AASB 20 applies to entities subject to rate regulation that determines how much and when they can charge customers for goods or services supplied under a regulatory agreement, for example in sectors such as electricity, water and gas.
Differences in timing arise when compensation for regulatory goods or services supplied in one reporting period is reflected in regulated rates charged in another period.
The Standard requires entities to provide information about the effect of these timing differences on their financial performance and financial position.
AASB 20 supersedes AASB 14 Regulatory Deferral Accounts and applies to annual reporting periods beginning on or after 1 January 2029.
The Australian Accounting Standards Board (AASB) has issued ITC 58, seeking Australian feedback on the International Accounting Standards Board’s (IASB) review of IFRS 9 and IFRS 7 hedge accounting requirements.
The IASB is seeking feedback on whether the requirements are achieving their intended objectives, the costs of applying and enforcing them, and whether users are receiving the expected benefits. Feedback from earlier outreach was generally positive, with most stakeholders indicating that the hedge accounting requirements are working as intended and provide better alignment between accounting and risk management than IAS 39. The IASB also noted some areas of ongoing judgement and cost, including assessing whether forecast transactions are highly probable and determining whether an economic relationship exists.
Australian stakeholders can submit comments to the AASB by 9 November 2026. The IASB’s international consultation remains open until 26 January 2027.
Regulations
Group 1 companies preparing their sustainability report for 30 June 2026 are reminded that Form 398 Copy of sustainability report and auditor’s report needs to be completed and lodged separately from Form 388 Copy of financial statements and reports, which is used to lodge the annual financial report.
Form 398 should be lodged separately even where the sustainability report is included in the annual report.
A total of 21 companies has paid infringement notices totalling $4.158 million after allegedly failing to lodge their financial reports for the year ended 30 June 2025 on time. Each company paid $198,000 after missing the 31 October 2025 lodgement deadline.
ASIC said the action sends a clear message to reporting entities, including listed companies and large proprietary companies, that financial-reporting deadlines matter. Timely lodgement remains an enforcement priority, and the regulator will continue to identify and investigate entities that either lodge late or fail to lodge altogether. Since commencing its surveillance programme in August 2025, ASIC has reportedly issued 48 infringement notices, with penalties exceeding $9.3 million.
ASIC has issued ASIC Corporations (Amendment) Instrument 2026/708, formalising increases to the net tangible assets requirements for responsible entities of registered managed investment schemes. The changes also apply to operators of investor directed portfolio services (IDPS) and corporate directors of retail corporate collective investment vehicles (CCIVs).
The revised requirements take effect from 1 July 2027, increasing the minimum financial thresholds to account for inflation since they were last updated in 2013. The thresholds will then be adjusted annually in line with inflation, with ASIC publishing the updated amounts.
ASIC has also updated Regulatory Guide 166 AFS licensing: Financial requirements to reflect the changes.
In a recent speech titled Trust, transparency and the future of financial reporting, ASIC Chair Sarah Court outlined the regulator’s priorities for improving financial reporting and audit quality.
Key areas of focus include:
- Managed investment schemes: ASIC plans to review financial reports and audits, with particular attention to asset valuations and the auditors’ approach to valuation testing.
- Audit firm regulation: ASIC supports proposed reforms, including a licensing regime for audit firms and stronger enforcement and disciplinary powers.
- Climate reporting: ASIC is working with Treasury to improve the efficiency of mandatory climate-related financial disclosures while supporting entities through implementation.
- Financial reporting compliance: ASIC continues to take action against late or missing financial reports and audit failures.
ASIC also highlighted improvements in the quality, quantity and consistency of climate-related financial information following the introduction of mandatory sustainability reporting.
The Australian Charities and Not-for-profits Commission (ACNC) has highlighted resources to help charities prepare for and run their annual general meetings (AGMs).
Before the meeting, charities should check their governing documents, funding agreements and relevant state or territory requirements to confirm the timing, required business and voting arrangements. The ACNC provides templates for meeting agendas, notices and minutes. Common AGM matters include reviewing the previous meeting’s minutes, presenting annual and financial reports, and electing board members. Some charities may also need their financial statements reviewed or audited before the meeting.
After the AGM, charities should finalise the minutes and notify the ACNC of relevant changes to board or committee members. Small charities generally have 60 days to report these changes, while medium and large charities have 28 days.
The Victorian Department of Treasury and Finance updated its wage inflation and discount rate information on 1 October 2026, incorporating rates compiled to 30 September 2026. The rates assist Victorian public-sector entities in measuring long service leave and annual leave liabilities where annual leave is measured on a discounted basis.
Sustainability
The AASB, Chartered Accountants Australia and New Zealand (CA ANZ) and CPA Australia are holding a series of in-person workshops to support entities implementing AASB S2 Climate-related Disclosures.
The workshops focus on the measurement and disclosure of greenhouse gas emissions under AASB S2. This is a timely area for preparers, directors and advisers as entities work through the practical challenges of collecting emissions data and preparing their first mandatory climate-related financial disclosures.
Sessions are being held around Australia during November 2026. The workshops provide practical implementation support for organisations applying the existing requirements of AASB S2.
The workshops are open to individuals from Group 1 – 3 corporate reporting entities who are involved with internal preparation of greenhouse gas emissions measurement or disclosure in accordance with AASB S2.
ASIC has identified ongoing concerns with sustainability-related claims in prospectuses and other fundraising documents reviewed during FY2025-26, covering sectors including mining, construction, consumer products and investment management.
Common issues include:
- Broad sustainability or environmental, social and governance (ESG) claims without sufficient evidence.
- Limited explanation of emissions-reduction strategies and ESG investment screening methods.
- Inconsistencies between regulatory disclosures and other corporate materials.
- Positive sustainability claims that did not adequately explain related risks or limitations.
Entities making sustainability-related claims need have been reminded to ensure they are specific, supported by evidence and consistent across public materials. ASIC’s Information Sheet 271, How to avoid greenwashing when offering or promoting sustainability-related products and services, provides further guidance.
The International Sustainability Standards Board (ISSB) has proposed guidance to help companies report material financial information about nature-related risks and opportunities, including how their dependencies and impacts on nature may affect their prospects.
The draft IFRS Sustainability Disclosure Practice Statement 1 Nature-related Disclosures builds on IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information. It aims to improve the quality and comparability of disclosures and draws extensively on the work of the Taskforce on Nature-related Financial Disclosures. The proposals also highlight the importance of location and engagement with Indigenous Peoples, local communities and other affected stakeholders.
The Practice Statement would not be mandatory for companies claiming compliance with ISSB Standards. However, the ISSB is seeking feedback on whether the guidance should remain a Practice Statement or eventually take another form, such as a mandatory standard.
The consultation closes on 19 February 2027.
CA ANZ has published a recording and summary of its September 2026 webinar on preparing for mandatory climate reporting.
Drawing on the experience of organisations in Australia and New Zealand, the session covers where to start, which areas to prioritise and how to maintain a clear trail of documentation and supporting evidence. These insights may help entities build their internal capability as they prepare for reporting requirements.
The CA ANZ Sustainability Resource Centre also provides recordings and summaries of earlier webinars covering Australia’s first climate disclosures, climate-related risks, transition plans, Scope 3 greenhouse gas emissions, greenwashing, nature-related disclosures and carbon-accounting software.
International Financial Reporting Standards (IFRS) developments
At its September 2026 meeting, the International Accounting Standards Board (IASB) continued discussions on its project on financial instruments with characteristics of equity, focusing on obligations to purchase an entity’s own equity instruments, including written put options over non-controlling interests.
The Board tentatively decided that, where an obligation does not give the entity access to the returns associated with the non-controlling interest, the initial debit would be deducted from non-controlling interests without derecognising the interest itself. The amount would generally be presented separately in the statement of financial position.
The IASB also tentatively decided that:
- Gains and losses from remeasuring the financial liability would be recognised in profit or loss.
- When a written put option over a non-controlling interest expires, the difference between the liability’s carrying amount and the amount initially deducted from non-controlling interests would also be recognised in profit or loss.
The IASB has yet to decide how the financial liability should be measured, with discussions to continue at future meetings.
The IASB continued work on improving the amortised cost requirements in IFRS 9 Financial Instruments, focusing on the 10 per cent test for determining whether a modified financial asset or liability should be derecognised.
The IASB tentatively decided that the test should consider all contractual terms. For instruments with options or contingent terms, cash flows would be assessed assuming the option is exercised, or the contingent event occurs, at the earliest contractually permitted date. For revolving credit facilities, the test would consider the facility’s contractual terms as a whole, including its maximum credit capacity over the remaining term.
Where a modification does not result in derecognition, the Board tentatively decided that:
- The effective interest rate would be adjusted for changes in the contractual interest rate relating to the time value of money or credit risk.
- Directly attributable modification fees, transaction costs, premiums and discounts would generally be included in the instrument’s carrying amount and amortised over its remaining term.
The proposals remain under development, with no change to current accounting requirements at this stage.
At its September 2026 meeting, the IASB has completed its main redeliberations on proposed revisions to IAS 28 Investments in Associates and Joint Ventures and will begin balloting the revised standard.
The IASB tentatively decided to require entities to disclose their accounting policy for recognising gains and losses arising from transactions with associates and joint ventures accounted for using the equity method. Similar requirements would apply where the equity method is used in separate financial statements. The Board also settled several transition and disclosure matters, including requirements for entities using the undue cost or effort exemption.
The revised IAS 28 is expected to apply to annual reporting periods beginning on or after 1 January 2029, with early application permitted, assuming the final standard is issued in the first half of 2027.
The IASB decided that the proposals do not require re-exposure and has commenced the balloting process.
The Board is considering changes to clarify how acquisition-related payments are classified in the statement of cash flows, distinguishing consideration for a business combination from other payments connected with the acquisition.
Under the Board’s tentative decisions:
- Payments of deferred and contingent consideration arising from a business combination are classified as investing activities.
- Payments to settle an acquiree’s pre-existing debt are classified as financing activities.
- Transaction costs associated with the business combination are classified as operating activities.
The IASB also tentatively supported new disclosures linking the indirect cash flow reconciliation to relevant balances in the statement of financial position. These disclosures would cover specified non-cash changes arising from foreign currency translation, obtaining or losing control of a business, and reclassifications, presented in a table.
The decisions remain tentative as the Board continues its deliberations.
A podcast summarising all other matters discussed by the Board can be found at the IFRS website.
The IASB has released the second webcast supporting the implementation of IFRS 20 Regulatory Assets and Regulatory Liabilities, issued in May 2026. The standard introduces accounting requirements for companies subject to rate-regulatory schemes.
The webcast explains how entities determine their total allowed compensation and identify timing differences. These concepts help determine whether a regulatory asset or regulatory liability arises. It also uses examples to explain common forms of compensation included in regulatory agreements when setting regulated rates.
The webcast forms part of the IASB’s implementation support materials, which also include an overview of IFRS 20 and videos on preparing for implementation.
In case you missed it
Nexia Australia has released its illustrative financial report for independent schools for the financial year ending 31 December 2026.
The publication is a Tier 2 general purpose financial report prepared in accordance with AASB 1060 General Purpose Financial Statements – Simplified Disclosures for For-Profit and Not-for-Profit Tier 2 Entities and reporting under the Australian Charities and Not-for-profits Commission Act 2012.
The 2026 edition incorporates new and amended accounting standards and other pronouncements applicable for the first time for 31 December 2026 balance dates.
The illustrative report is available on our website.
