ASIC announces results from review of 31 December 2016 financial reports

On 31 May 2017 we released a post regarding ASIC’s focus areas for surveillance on 30 June 2017 financial reports.

Following on from that theme, ASIC has now announced the results from its review of 31 December 2016 financial reports.  ASIC reviewed the financial reports of 90 listed and other public interest entities for the period.  The results reveal a continued focus on findings relating to impairment of non-financial assets and inappropriate accounting treatments.

Following the review, ASIC made enquiries of 23 entities on 28 matters seeking explanations of accounting treatments.

In addition to impairment of non-financial assets, ASIC also raised queries regarding consolidated accounting, amortisation of intangibles, revenue recognition, tax accounting, business combinations and other matters.

With respect to the key focus areas, impairment of non-financial assets and inappropriate accounting treatment, ASIC’s findings included discrepancies with respect to:

• determining the carrying amount of cash generating units
• the reasonableness of cash flows and assumptions
• use of fair value
• impairment indicators, and
• disclosures.

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

Aaron Dahl

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

A case of déjà vu as ASIC continues to request realism and clarity in financial reports

Every six months, ASIC publishes its areas of surveillance on financial reports soon to be lodged by reporting entities.

For 30 June 2016, ASIC has reiterated its focus that financial reports clearly articulate the approach to valuation of assets and accounting policy choices.  This is continuing the theme from ASIC’s review of 31 December 2015 financial reports when ASIC Commissioner, John Price, stated:

‘The largest number of our findings continue to relate to impairment of non-financial assets and inappropriate accounting treatments. Directors and auditors should continue to focus on values of assets and accounting policy choices.’

ASIC’s media release mirrors its requests from previous financial reporting periods, and asks for directors to apply ‘realism and clarity’ to their financial reports.  ASIC is particularly concerned with companies: