The following two new accounting standards are worth considering for early adoption for preparers of financial reports, for the year ended 30 June 2008:

• AASB 8 Operating segments (applicable for annual reporting periods beginning on or after 1 January 2009 — earlier application is permitted)
• AASB 2008-2 Amendments to Australian accounting standards — puttable financial instruments and obligations arising on liquidation (applicable for annual reporting periods beginning on or after 1 January 2009 — earlier application is permitted)

Proprietary companies and for-profit unlisted public companies, except for those entities with immediate plans to list on a stock exchange, that adopt AASB 8 early are permitted to discontinue with segment reporting because of the standard’s narrower scope of application.

AASB 8 applies to all for-profit entities whose debt or equity instruments are traded in a public market, and which files, or is in the process of filing, its financial statements with a securities commission or other regulatory organisation for the purpose of issuing any class of instruments in a public market.

In contrast, AASB 114 Segment reporting, which remains applicable but will be superseded on application of AASB 8, applies to all for-profit entities.

Co-operatives and partnerships may benefit from early-adopting AASB 2008-2, a standard which amends AASB 132 Financial instruments: presentation.

Prior to the issue of AASB 2008-2, some specific types of financial instruments (such as ordinary shares and partnership interests that allow the holder to ‘put’ the instrument for cash redemption from the issuer) which are, in substance, ‘equity’ were classified as liabilities by AASB 132 because the holder of such financial instruments can require cash redemption from the issuer.

Preparers of financial reports are reminded that where early application of any of the above standards is adopted, they are required to disclose the fact. The transitional provisions will also be applicable along with the early adoption of the standard.

Further information

• about AASB 8 read Knowledge bank — September 2007
• about AASB 2008-2 read Financial instruments standards to be adopted
• visit the AASB website to view the Action Alert