A new amended accounting standard has been released by the Australian Accounting Standards Board (AASB). AASB 2020-2 will come into effect from 1 July 2021.

This will change the reporting requirements of certain for-profit private sector entities which will no longer be able to self-assess financial reporting requirements and prepare special purpose financial statements (SPFS) if their trust deeds were created or amended on or after 1 July 2021 and require preparation of financial statements that comply with Australian Accounting Standards (AAS).

These entities will now need to prepare, as a minimum, Tier 2 general purpose financial statements (GPFS) that comply with all recognition and measurement requirements in AAS and minimum simplified disclosures.

This change means new SMSFs that are set up after 1 July 2021 and wish to prepare SPFS will need to ensure they don’t have a clause in their trust deeds that require their financial statements be prepared in accordance with the AAS.

Similarly, existing SMFSs that intend to change their trust deed after 1 July 2021 should remove such a clause if they wish to continue preparing SPFS.

Most SMSF trust deeds refer to the financial statements being prepared in accordance with the super laws and do not refer to the AAS so this should not become an issue for the majority of SMSFs.

The AASB have published a key facts document which explains the impacts of AASB 2020-2 and this will assist the industry navigate any impacts of the new financial reporting requirements.

The standard SMSF trust deeds used by Intello do not make any references to financial statements needing to be prepared in accordance with the AAS, therefore this change is unlikely to impact any of our clients.

If however your SMSF trust deed is older or of questionable quality, it is definitely worth reviewing.

Advisers and Accountants can request a trust deed update via the Intello Adviser Portal.