Below are the key regulatory activities that Australian financial reporters should understand in June 2023.
Focus areas for 30 June 2023
The 30 June 2023 ASIC focus areas have not yet been released (but should be shortly available on the ASIC website), however we expect them to be similar to the December 2022 list which included:
- Asset values – i.e., whether assets including goodwill and receivables are being carried at too high a value;
- Provisions – need for and adequacy of provisions such as onerous contracts, financial guarantees and restructuring;
- Solvency and going concern;
- Events after the reporting period;
- Disclosure – particularly disclosure about uncertainties, changing key assumptions and sensitivities.
ASIC continue to identify entities where they believe misapplication of accounting standards has occurred, the subject of the 2023 restatements and related media release reference are shown in the diagram below:
Material business risks
ASIC are continuing to highlight entities whose material business risk disclosure in the Operating and Financial Review is not sufficient.
In their media release 23-018MR Focus on material business risk disclosures in annual reports they noted:
- Operating and financial reviews should include disclosure of material risks that may affect the achievement of a listed entity’s strategies and prospects.
- Directors must provide investors with useful and meaningful information about the impact on current and future performance of changing and uncertain market conditions.
- The directors’ report of a listed entity must contain information that shareholders would reasonably require to make an informed assessment of the entity’s operations, financial position and business strategies, and prospects for future financial years.
- Six entities have been required to make changes to their material business risk disclosures so far in 2023.
We want to remind ACNC registered medium or large charities who prepare special purpose financial statements that they will be required to disclose related party transactions in their financial statements from 30 June 2023.
Charities can choose to comply with the requirements of either AASB 124 Related Party Disclosures or the related party disclosure from AASB 1060 General Purpose Financial Statements – Simplified Disclosures for For-Profit and Not-for-Profit Tier 2 Entities which are included in paragraphs 189 – 191.
In addition, all registered charities will be required to disclose related party transaction information in their Annual Information Statement (AIS) from 30 June 2023. We understand that the dollar value will not be required, rather charities will choose the type of related party transactions they have undertaken by selecting from a pre-determined list.
The ACNC has a range of guidance on its website to assist charities in complying with these requirements and we encourage our clients to ensure that they have appropriate systems in place to capture the relevant information.
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.