New proposed financial reporting standard – PBE IPSAS 40 PBE Combinations

The External Reporting Board (XRB) recently issued for comment a proposed standard on PBE combinations. The exposure draft applies to charities reporting under Tier 1 or Tier 2 standards.

The exposure draft explains how to account for situations where two or more entities are being combined into a single entity for operations. In particular, the exposure draft explains:

  • The difference between an amalgamation and an acquisition;
  • How the financial effects of these transactions are measured; and
  • How these transactions need to be reported in the financial statements

The exposure draft does not propose significant changes to how acquisitions are currently accounted for under PBE IFRS 3 Business Combinations but does include additional requirements for the recognition of goodwill and more relevant examples for not-for-profits.

If this didn’t make sense to you, don’t worry. The exposure draft only applies where charities are combining with other entities so if this is not the case for your charity then it won’t apply.

Comments on the exposure draft are open until 31 January 2019. The full document and information on how to comment can be found here. (external link)