This is our second blog in a series by Kevin Franey, Audit & Assurance Partner at TNR Chartered Accountants. TNR has extensive co-operative advisory, auditing and taxation experience.
The Business Council of Co-operatives and Mutuals (BCCM) has been working with the Australian Accounting Standards Board (AASB) to improve awareness and understanding of the Co-operative and Mutual Enterprise (CME) sector, especially in the accounting sector.
This initiative arises from the lack of awareness of the structure of co-operatives and mutuals, the benefits they bring and inadequate quality of professional advice and services these businesses receive.
We were pleased to be an active member of the BCCM’s Accounting Working Group, which worked closely with the AASB in the development of a publication titled “AASB Staff FAQ: co-operative and mutual enterprises commentary and FAQ’s”.
This publication is very useful for those operating in the sector whether they be members or advising professionals. The publication provides an understanding of:
- the difference between CMEs and other entities;
- CME accounting and reporting framework; and
- Illustrative examples of financial reporting disclosures.
For instance, Questions 9 & 10 of the FAQs discuss financial reporting obligations for CMEs. It is important to consider the following when determining your organisation’s financial reporting obligations:
- Check the legislation you are operating under to determine the type of entity your organisation may be.
- Are you large or small as defined by the legislation and regulations?
- Are you a “reporting entity” as defined under Australian Statement of Accounting Concepts SAC 1 Definition of a Reporting Entity?
- Do you need to prepare:
- Special purpose financial reporting (you are not a reporting entity)?
- General purpose financial reporting (you are a reporting entity)? Note that you may be eligible to prepare financial reporting under the Reduced Disclosure Framework which relieves you from the need to provide a range of accounting standard disclosures saving time and money.
If special purpose financial reporting is adopted, your minutes should document the reason why you believe that your organisation is not a Reporting Entity. Seek help if you are unsure on your financial reporting obligations.