The Australian Accounting Standards Board (AASB) has published a series of co-operative and mutual enterprise FAQs on its website.
The FAQs explore how co-ops and mutuals differ from other organisations, and what implications these differences might have when assessing their financial position and performance. They were developed by the the Business Council of Co-operatives and Mutuals’s (BCCM) accounting working group, alongside the AASB, to promote understanding of the model.
“Co-operative and mutual enterprises (CMEs) have existed in Australia for centuries,” said the BCCM. “Despite this long history, they are not recognised or understood by many Australians, and their impact on our society and economic life is not sufficiently appreciated.”
It added: “We are grateful to them for their hard work in ensuring CMEs are understood by accounting professionals.”
The initiative arises from the 2015 Senate Inquiry into the role, importance, and overall performance of cooperative, mutual and member-owned firms in the Australian economy, which recommended improving awareness among the accounting and legal professions of the financial reporting standards of co-operatives and mutuals.
In the introduction to the FAQs, BCCM points out that Australian has more than 2,000 CMEs, with 29 million active members – and the top 100 have a combined turnover of AU$30bn.
The questions themselves come in three sections:
- what co-ops and mutuals are, how they differ from other entities and what issues affect them
- financial reporting issues specific to the sectors, such as accounting for member interests
- additional financial reporting example disclosures – possible additional reporting by CMEs aimed at informing stakeholders of their CME status and its implications.
There is also a bibliography of other relevant sources of information on the CME sector and details of the co-operative principles.
BCCM says the FAQ document will give existing and potential members of CMEs and other users of their financial statements a greater understanding of how these entities differ from other organisations, and what implications these differences might have when assessing their financial position.
And, for those preparing financial statements for the sector, it offers guidance on a consistent application of Australian accounting standards. It also helps them better explain the distinguishing features of CMEs.
It hopes clearer information will enable potential customers for CMEs to identify suppliers which are aligned with their objectives, and enable CMEs to access funding for their development more easily
