Corporations Act and AASB changes to executive remuneration reporting requirements to apply for 30 June 2008 financial year
02/06/2008
mail.png

While several recent issues of our newsletter have flagged that the government’s and Treasury’s review of executive remuneration is likely to result in some significant changes, other changes have already been announced for implementation effective for the financial year ending 30 June 2008.

The changes stem from amendments to the Corporations Regulations last year and recently announced changes to AASB 124. We report on these in this article.

On Thursday 22 May 2008 the AASB approved Accounting Standard AASB 2008-X Amendments to Australian Accounting Standard – Key Management Personnel Disclosures by Disclosing Entities. (see HERE).

The amendments were only shared a few weeks ago as ED 162, Proposed Amendments to Key Management Personnel Disclosures by Disclosing Entities, an Exposure Draft (ED) amending AASB 124 Related Party Disclosures (see HERE).  Only a few weeks were allowed for comments.

Accounting Standard AASB 2008-X will:

• relieve companies that are disclosing entities from providing detailed key management personnel (KMP) remuneration disclosures in both the Remuneration Report and notes to the financial statements
• not impact other disclosing entities, such as managed investment schemes
• be mandatory for annual reporting periods ending on or after 30 June 2008

Amendments to the Corporations Act Regulations were published on 28 June 2007 (see our news article at the time HERE).  Among other things, these amendments removed Regulation 2M.6.04, which previously allowed detailed KMP remuneration disclosures (including comparatives – i.e. those required by AASB 124 paragraphs Aus25.2 to 25.7.2) to be provided in the Remuneration Report instead of, or in addition to, disclosure in the notes to the financial statements.  This relief had been withdrawn for years beginning on or after 1 July 2007.  Regulation 2M.3.03 had also been amended to copy the detailed KMP remuneration disclosures from AASB 124.

As a consequence of these changes to both 2M.3.03 and AASB 2008-X disclosing entities that are companies will now not be required to include the detailed KMP remuneration disclosures in both the Remuneration Report and the notes to the financial statements. On adoption of the amended standard resulting from the ED, the required disclosures may only be provided in the Remuneration Report.

However, some KMP information required under AASB 124 paragraphs 16 and Aus25.7.3 to 25.9.3 but not required by the Corporations Act or regulations will still need to be reported in the financial statements.  These disclosures include the summary KMP remuneration disclosure (in total and by category for all KMP, not by individual), roll-forwards of options and rights holdings of each KMP, equity holdings and transactions of each KMP, loan disclosures, and other transactions and balances. 

Unlike AASB 124 para Aus25.4, regulation 2M.3.03 does not require disclosure of all KMP by remuneration category, i.e. a total for each type of remuneration across the reported KMP.  The regulation also does not require an individual’s total remuneration for the year.  However, we expect that companies will continue to report these totals in the remuneration report purely because readers find total remuneration by person useful for comparative purposes. 

As we are on the subject of comparisons, the Corporations Act and Corporations Regulation require only limited disclosure of comparative information, compared to the requirements of AASB 124.  The Corporations Act requires the remuneration report disclosures to be audited.

© Guerdon Associates 2024
read more Back to all articles