The Australian Securities and Investment Commission (ASIC) continues to update its areas of focus and requirements. Here, we provide an outline of recent activities, relevant to Australian businesses.
Financial reporting and AGM relief
ASIC has recently provided an extension to the financial reporting deadlines for listed and unlisted entities (lodging under Chapters 2M and 7). This affects entities with reporting dates up to and including 7 January 2021, and provides an extension of one month.
ASIC has also confirmed their no action position for AGM’s not held within five months, so long as they are held within seven months of the reporting period.
Financial reporting focus areas
ASIC’s areas for focus for 31 December 2020 will be issued in December, however at the time of writing they have not been released. Given that they are expected to be similar to the 30 June focus areas, we have provided these below for reference.
ASIC’s review of financial statements
ASIC review financial statements following each reporting period and in December will release the results from 30 June 2020 reviews. Almost 50% of the enquiries arising from the 31 December 2019 reviews related to revenue and impairment.
Some areas for you to consider as you enter your next reporting season in relation to the matters raised by ASIC and their focus areas are:
- Revenue accounting policy: Is it generic, are your revenue streams, performance obligations etc clear?
- Impairment: Are your assumptions supportable and up-to-date, or are they the same as every other year?
- Look at your impairment disclosures. Are they boilerplate?
- Tax accounting: Do you understand how tax expense was derived and do you have support for the deferred tax asset?
- Provisions: When did you last reassess the appropriateness of provisions for rehabilitation (including makegood), warranties and employee benefits?
- Financial instruments: Do you understand the accounting for your financial instrument transactions and how they were valued?
- Consolidation / significant influence: What is the relationship with your investments?
- Leases: Have you explained choices made and applied them consistently? If you have any rent concessions arising from COVID-19, do you understand the choices available to you and the associated accounting?
ASIC continues to publish information about the restatements made by companies following ASIC investigations and discussions, which are useful for directors and finance teams to review to ensure that similar scenarios in their financial statements are accounted for appropriately.
The restatements from the last six months (along with the details of the relevant media release) are shown below:
Contact your local Bentleys audit and assurance expert for assistance with your financial reporting.
We, at Bentleys, are doing everything we can to help businesses come out of this challenging time in good shape.
We will continue to update our COVID-19 resource hub with important developments, so please return soon.
Disclaimer: This information is general in nature and should not be relied on as advice. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs and seek professional advice before making any decisions based on this information.