Register / AASB 1054 Australian Additional Disclosures / AASB 1054 paragraph 16
Reconcile net operating cash flow to the right profit figure
When the entity uses the direct method, the financial statements reconcile net operating cash flow to the operating profit or loss subtotal under AASB 18 paragraph 69(a). Where the entity is a superannuation entity that applies AASB 1056, or a public sector not-for-profit other than a higher education provider that has elected the Aus47.2 relief and shows no such subtotal, the reconciliation goes to the profit or loss total.
Why the paragraph exists
This is the paragraph that tells a preparer which profit number is the reconciliation destination. It is the other half of the AASB 107 Aus20.1 change.
In practice
Name the destination total in the reconciliation note and cross-reference it to the statement. Where the entity has no operating subtotal, the destination is the profit or loss total.
Apply the same destination to the comparative. A reconciliation that changes destination between years is hard for a reader to follow and hard for an auditor to accept.
The mistake to avoid
The common mistake is to reconcile to the old operating profit line after the categories are removed.
Who it binds
An entity that presents its cash flow statement using the direct method.
What to do before the date
- Confirm the entity falls in this group: For-profit entity, NFP private sector, NFP public sector, NFP higher education provider and Superannuation entity.
- Put the requirement into the financial statements preparation plan: reconcile net operating cash flow to the right profit figure.
- Open a workpaper for the first evidence item: The reconciliation note with the destination total named and cross-referenced to the statement of profit or loss.
Evidence an auditor will ask for
Dates
| Date | What it means | Applies to |
|---|---|---|
| 2026-12-31 | Commences for for-profit entities other than superannuation entities applying AASB 1056 | for-profit |
| 2027-12-31 | Commences for not-for-profit entities and superannuation entities applying AASB 1056 | NFP entities and superannuation |
| 2027-01-01 | Annual periods beginning on or after this date for for-profit entities other than superannuation entities | for-profit |
| 2028-01-01 | Annual periods beginning on or after this date for not-for-profit entities and superannuation entities | NFP entities and superannuation |
Commencement and application are separate tests.
Cross-references
- AASB 1039 paragraph 21
- AASB 107 paragraph Aus20.1
- AASB 18 paragraphs 69 and Aus47.2
Record note
The reconciliation is only required when the direct method is used. The destination depends on the entity type and the presence of an operating subtotal.
Questions
What does AASB 1054 paragraph 16 require in practice?
Name the destination total in the reconciliation note and cross-reference it to the statement. Where the entity has no operating subtotal, the destination is the profit or loss total.
What is the common mistake under AASB 1054 paragraph 16?
The common mistake is to reconcile to the old operating profit line after the categories are removed.
What evidence should be kept?
At least: The reconciliation note with the destination total named and cross-referenced to the statement of profit or loss.; The statement of profit or loss showing whether an operating profit or loss subtotal is presented. The kit carries each one as a row with an owner column to complete.
Source
This page is our statement of the paragraph, cited so you can check it. Read F2026L01162 on legislation.gov.au.
Source pointer: AASB 1054 paragraph 16. Record retrieved 2026-10-20.