This presentation was made by Alan Greenslade, Australia, at the 17th Annual Meeting of OECD Senior Management Officials held at the OECD, Paris, on 2-3 March 2017

1. 1
Simplification of Government
Financial Statements – the Australian
Experience
Alan Greenslade
First Assistant Secretary, Financial Analysis Reporting and
Management
Department of Finance

2. 2
Background
 Uses of independently set IFRS based standards
o similar to IPSAS standards
 GFS overlay at Consolidated level
 Standards are designed for full requirements of GPFR
 Disclosure requirements are set by the accounting standards
 Around 200 reporting entities
March 2017

3. 3
Drivers for simplification
 Financial statements have a limited readership
o Users interested in more timely and accessible information
o Budget papers are simpler and more widely read
o Final Budget Outcome is more accessible and timely
 Accretion of “clutter” over time
o over-explanation of detailed matters
o technical worthiness tending to override readers’ needs
o use of statements for “other” accountability purposes
 Cost of preparation and audit
 “Red Tape” initiatives
March 2017

4. 4
Simplification approach
 Shorter statements (remove information overload)
 Better presentation of the same information (improve clarity)
 Meet the standards – don’t unneceserally exceed
 Considering trade-off between reducing preparation and audit
costs vs user information needs
March 2017

5. 5
Simplification program
 Rigorous review of disclosures not required by standards
 Consider the materiality of some disclosures
 Write technical matters for brevity and clarity
 Restructuring the order of disclosure notes
 RDR for most entities (that do not have complex financial risk)
March 2017

6. 6
Implementation considerations
 Important to have the auditors “on side”
 Costs are mostly up front and can be seen as an investment
 Reducing and simplifying entity financial statements adds to
the processes, costs and risks of W-o-G consolidation
March 2017

7. 7
Process steps
 New Financial Reporting Rules for entities
o simpler, shorter and clearer
 Entities were enabled and encouraged to have “fit for purpose”
disclosures
 Model financial statements showing how the most common
disclosures could be better presented
 Guide provided to entities to support simplification
o including a checklist for better presentation
March 2017

8. 8
Benefits realised
 Less volume – 30% reduction in pages, leading to:
o Better understanding
o Less technical information eg accounting policies
o Less information overload
 Streamlined preparation process
 Auditors and audit committees have less to review
March 2017

9. 9
Matters to be resolved
 Limitations on simplification imposed by accounting standards
 Implementing RDR
 Tension between readability expectations and accountability
expectations
 A high proportion of disclosure notes are still highly technical
 Look again at the requirements of the standards
o supported by the standard setter
March 2017

10. 10
March 2017
Questions?