GRAP Article 2015: ASB Directive 11’s Once-Off Change in Asset Measurement

The ASB issued Directive 11 ‘Changes in measurement bases following the initial adoption of Standards of GRAP’ to assist with this challenge, through provisions to change its accounting policy on a once-off basis. In terms of Directive 11, entities are able to take advantage of the provisions for a “once-off accounting policy change” within a period of three years. The three-year consideration is the latter of the following:
(i) the expiry date of the transitional provisions applied on the initial adoption of the GRAP Standards,
(ii) the effective date of Directive 11 (i.e. financial statement periods commencing on or after 1 April 2015). In terms of Directive 11, earlier application is also permitted.

Directive 11.05 states that the change in accounting policy as allowed by GRAP 3.13(b) can be applied, in that entities who initially adopted the fair value model or revaluation model may change to the cost model, as set out per the table below. This once-off change will only be allowed when the entity made an inappropriate accounting policy choice on the initial adoption of the Standards of GRAP, allowing for a change from revaluation / fair value model to cost model. Thus for such once-off change from the fair value/revaluation model to the cost model, an entity need not prove that this change in accounting policy results in the financial statements providing reliable and more relevant information about the effects of transactions, other events or conditions on the entity’s financial position, financial performance or cash flows.

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