Subject: Reduced Disclosure Regime (RDR)
The purpose of this memorandum is to respond to the company request about a new initiative of the Australian Accounting Standards Board (AASB) known as the Reduced Disclosure Regime (RDR). The following clarifies what RDR is, its purpose, who it applies to, how it fits within the Corporations Act and any adoption issues which could be considered.
In summary, the Reduced Disclosure Regime (RDR) has been created to allow for the preparation of less intricate and more useful general purpose financial reports for non-publicly accountable entities through the removal of unnecessary disclosures. It consists of two Australian Accounting Standards AASB 1053 Application of Tiers of Australian Accounting Standards and AASB 2010-2 Amendments to Australian Accounting Standards. These standards indicate the framework for preparation of financial reports and disclosures which may be omitted. Although RDR is expected to be beneficial to preparation of financial reports there are adoption issues surrounding compliance with International Financial Reporting Standards (IFRS).
RDR is a direction for reporting entities (not publicly accountable) to prepare general purpose financial reports that are less complex with exemptions of certain disclosures which are deemed unnecessary; without diminishing relevance and increasing the consistency and transparency of information. This is part of a movement to make reports more meaningful and useful to the user.
It may be applied for the financial year beginning 01 July 2013 and onwards, however there are instances where early adoption may be allowed from the 01 July 2009. (See Appendix 1 – RDRS for early adoption)
RDR is in effect as two Australian Accounting Standards:
1 – AASB 1053 Application of Tiers of Australian Accounting Standards
2 – AASB 2010-2 Amendments to Australian Accounting