How to prepare a GPFS

You have a Part 2M.3 obligation

If you have an obligation to prepare financial reports under Part 2M.3 of the Corporations Act, your GPFS must be prepared in accordance with accounting standards, as defined in the Corporations Act, and the authoritative pronouncements of the Australian Accounting Standards Board (AASB).

You must give us a GPFS prepared using Tier 1 reporting requirements if you have 'public accountability' as defined in AASB 1053. If you are eligible to adopt Tier 2 reporting requirements, you may lodge a GPFS prepared on this basis. Alternatively, you may choose to use Tier 1 reporting requirements.

You don't have a Part 2M.3 obligation

If you don't have a Part 2M.3 obligation, your GPFS must be prepared in accordance with CAAP.

You need to prepare your GPFS in accordance with the listed CAAP. To check whether one of the listed CAAP applies in your circumstances, see What is CAAP (where Australian Accounting Standards don't apply).

A listed CAAP will apply in your circumstances. For example, if you use that CAAP to prepare your financial statements for general business purposes or to meet your other regulatory obligations.

If none of the listed CAAP applies in your circumstances, you may determine whether some other set of accounting standards is acceptable as CAAP. Make sure you follow the further guidance in What is CAAP (where Australian Accounting Standards don't apply).

You are a member of a group of entities

If you are a member of a group of entities consolidated for accounting purposes as a single group, your GPFS must relate either to you (a stand-alone GPFS), or you and some or all of the other members of your accounting consolidated group (a consolidated GPFS).

A 'group of entities consolidated for accounting purposes as a single group' refers to individual entities within a group of entities whose financial accounts are consolidated in accordance with the relevant accounting standards, in such a way that the assets, liabilities, equity, income, expenses and cash flow of the parent entity and the other members of the group are presented as those of a single economic entity.

An entity is a member of such a group if it is the parent entity or one of the entities the parent controls and its accounts are included in the consolidated financial statements of the group consistent with AASB 10 Consolidated Financial Statements or equivalent standards.

Paragraph 3CA(5)(b) provides an option for you to give us a stand-alone or consolidated GPFS (including a sub-group consolidated GPFS). Whether the option is available to you depends on:

• where you as an entity, to which section 3CA applies, are situated within your group, and
• the requirements of all of the relevant accounting standards that are applicable to you (bearing in mind the relevant consolidation standard may only permit a 'look down' the control chain approach).

Nonetheless, if you are subject to Part 2M.3, your GPFS must comply with all of the relevant requirements of the Australian Accounting Standards. For example, if you are a parent entity and you're not exempt under AASB 10, you may choose to give us a consolidated GPFS you have already prepared. However, in these circumstances it is also open to you to give us a stand-alone GPFS as long as it complies with AASB 127 Separate Financial Statements.

If you're not subject to Part 2M.3 and you choose to give us a consolidated GPFS, your GPFS must be prepared in accordance with CAAP. This may include one of the accounting standards specifically listed in the guidance below that are considered to be acceptable as CAAP. A CAAP you use must be a CAAP that applies in your circumstances, which may include the accounting standard that has been applied by your parent.

If none of the listed CAAP is applicable in your circumstances, then you can determine whether the accounting standards you apply are CAAP (see What is CAAP (where Australian Accounting Standards don't apply).

If you and/or your parent (whether immediate, intermediary or ultimate parent) use different accounting standards when preparing financial statements, you may consider that more than one CAAP applies in your circumstances. In such instances, a consistent CAAP must be used in subsequent years for preparing your GPFS except where that CAAP no longer applies.

 

Effect of relief from preparing financial reports

If you are relieved by ASIC – through an Instrument or Class Order – from preparing financial reports under Part 2M.3 of the Corporations Act, you must prepare your GPFS in accordance with Australian Accounting Standards.

If you are relieved by ASIC from preparing financial reports for other reasons than that outlined above, you must prepare your GPFS in accordance with CAAP.

Information a GPFS must disclose

Australian Accounting Standards stipulate what information a GPFS discloses and how it is presented. A GPFS is defined in AASB 101 Presentation of Financial Statements as 'those intended to meet the needs of users who are not in a position to require an entity to prepare reports tailored to their particular information needs', and needs to comply with the requirements of all applicable standards.

A GPFS prepared in accordance with CAAP should provide a structured representation of the financial position, financial performance and cash flows of the entity. It should provide information that is useful to a wide range of users in making economic decisions. It should also show the results of management’s stewardship of the resources entrusted to it.

To meet this objective, the financial statements should be based on recognition and measurement criteria that faithfully represent the entity's financial performance and position, and provide information about the entity’s:

• assets
• liabilities
• equity
• income and expenses, including gains and losses
• contributions by and distributions to owners in their capacity as owners
• cash flows.

This information, along with other information in the notes to the financial statements, should assist users of those statements. For example, in predicting the entity’s future cash flows, including their timing and certainty.

You only need to give us information such as a director's declaration or a director's report where that declaration or report is required under the relevant CAAP.

Financial year most closely corresponding to the income year

If you are subject to Chapter 2M of the Corporations Act, ‘financial year’ in section 3CA means the financial year as defined in section 323D of that Act. This is usually a period of 12 months, not necessarily starting on 1 July.

For all other corporate tax entities, for the purposes of section 3CA, your financial year will be identical to the annual accounting period you have adopted. Your accounting period and the 'financial year' may not necessarily start on 1 July and your financial year may not necessarily align with your income year.

If you have a section 3CA obligation, you must give the Commissioner a GPFS for the 'financial year most closely corresponding to your income year'. Generally, this will be the financial year most recently concluded on or before the end of the income year.

 

What is CAAP (where Australian Accounting Standards don't apply)

We accept the following accounting standards as being 'commercially accepted principles relating to accounting' for the purposes of subparagraph 3CA(5)(a)(ii):

• International Financial Reporting Standards (IFRS)
• accounting standards that are IFRS-compliant, as published on IFRS.org (such as Australian Accounting Standards or IFRS as adopted by the European Union)
• US generally accepted accounting principles (GAAP)
• accounting standards that are accepted by ASX Limited from time to time for the purposes of its Listing Rules.

Where the accounting standards listed above do not apply in your circumstances, the principles and guidance provided in paragraphs A8, and paragraphs 3 and 4 of Appendix 2 of the Auditing Standard ASA 210 will assist you in determining whether the accounting standard that has been applied to prepare your GPFS is acceptable as CAAP.

Foreign residents conducting a business through a permanent establishment

If you are a foreign resident conducting a business through an Australian PE, your GPFS must be prepared in accordance with CAAP. They must relate to you and incorporate your Australian PE results, unless you are required to prepare financial statements under subsections 601CK (5)-(6) of the Corporations Act. In the latter case, you must prepare your GPFS in accordance with Australian Accounting Standards.

The GPFS you give us can be a stand-alone GPFS for you and your Australian PE or for the group or part of the group of which you, including your Australian PE, are a member. A PE is not a corporate tax entity or an entity. Consequently, your GPFS cannot be a stand-alone GPFS for only your Australian PE. Despite this, we consider it best practice for your GPFS to include separate measurement and disclosure of your Australian PE. Any separate measurement and disclosure of your PE should be prepared in accordance with the accounting standards you have adopted to prepare your GPFS.

A GPFS denominated in a currency other than Australian dollars does not need to be re-denominated into Australian dollars.

You don't need to give us a GPFS if you are a registered foreign company and lodge a GPFS with ASIC within the time provided in subsection 319(3) of the Corporations Act.

If the accounting standards applicable to you in your country do not describe a 'GPFS', we will accept that you have lodged a GPFS with ASIC if an appropriately qualified and independent person, such as your auditor, verifies those statements are in substance a GPFS. You don't need to provide us with the verification but you need to be able to produce it on request.

Members of tax consolidated groups or MEC groups

If you are a subsidiary member of a tax consolidated group or MEC group, you aren't required to give us a GPFS. However, if you join or leave a tax consolidated group or a MEC group part-way through an income year, you must give us a GPFS where you:

• meet the conditions that give rise to a GPFS obligation, and
• have an obligation to lodge an income tax return because you were not a member of a tax consolidated or MEC group for the entire year and were a taxpayer for part of the income year.