ASIC announces compliance focus areas for 30 June 2017 financial reports

ASIC today announced its focus areas for surveillance on 30 June 2017 financial reports.  The release highlights the matters that ASIC considers key areas for reporting entities to address and focus on in preparing financial reports for the 30 June 2017 financial year.

ASIC has again highlighted asset values and accounting policy choices as key matters.  In particular, the use of unrealistic assumptions in testing asset values and the application of inappropriate approaches to revenue recognition.

The key focus areas announced by ASIC in the release are:

• impairment testing and asset values
• revenue recognition
• expense deferral
• off-balance sheet arrangements
• tax accounting, and
• disclosures regarding:
• estimates and accounting policy judgements, and
• the impact of new revenue, financial instrument lease and insurance accounting standards.

A copy of ASIC’s media release can be found here.

Aaron Dahl

Crowd funding update - catering for the remaining 99%

It was good to see the release of draft equity crowd-sourced funding (CSF) legislation for proprietary companies, as part of the 2017-18 Federal Budget package (on 11 May) – with the Government responding to a number of criticisms from various stakeholders (including Labor), following the finalisation of the CSF regime for public companies.  These new laws will be welcome to many, with proprietary companies representing over 99% of companies in the Australian market.

The new laws will remove the need for proprietary companies to transition to public companies.  Instead, investors will be protected by additional obligations, which are currently proposed to include a requirement to have a minimum of two directors, complete financial reporting in accordance with accounting standards (including audit requirements where more than $1 million is raised), and restrictions on related party transactions.  In return, the prospectus disclosure requirements for CSF offers will be relaxed and ‘CSF shareholders’ will not count towards the current shareholder limit (of 50 non-employee shareholders) which applies to proprietary companies.

For a copy of the exposure draft of the new laws click here, together with the accompanying explanatory memorandum here.

For further details on the existing and upcoming CSF laws for public companies (which will commence on 29 September 2017), see our earlier blog:

• Equity crowd funding finally past the post - but is it a dodo? 23 March 2017

You will need to move quickly to have your say on the new laws for proprietary companies – with submissions closing on Tuesday, 6 June 2017.  However, the likely timing of the further changes remains to be seen and, with the recent laws for public companies having taken nearly 3 years to pass, may be met with some scepticism.  It is one we will continue to watch closely.

Reece Walker and Ben Wood