Below are the key regulatory activities that Australian financial reporters should understand in December 2022.
Non-lodgement of financial statements
ASIC have continued to impose fines on entities which have not lodged financial statements under Chapter 2M of the Corporations Act and some recent activity in this area and the quantum of the penalties can be seen in media releases (22-168MR, 22-180MR, 22-210MR).
ASIC have imposed their first greenwashing penalty on Tlou Energy Limited (Tlou) who paid a total of $53,280 to comply with four infringement notices issued by ASIC over concerns about alleged false or misleading sustainability-related statements.
The infringement notices were issued in relation to statements and images contained in two ASX announcements and ASIC was concerned that Tlou either did not have a reasonable basis to make the representations, or that the representations were factually incorrect (refer to 22-294MR).
This is a timely reminder that entities who make statements in relation to sustainability should ensure that they have evidence to support them and that they are not just aspirational.
The guidance relating to the preparation of general purpose financial statements was released and as foreshadowed in the previous newsletter, ASIC have determined that there are two types of AFSL holders:
- Tier 1 general purpose preparers – those who are publicly accountable in accordance with the AASB 1053 definition and those designated as such by ASIC (including those regulated by ASIC and providers of a custodial or depository service).
- Tier 2 general purpose preparers – all other AFSL holders.
We note there was some transition relief which allowed AFSL holders registered under Chapter 7 to continue to prepare special purpose financial statements which complied with all recognition and measurement requirements at 30 June 2022.
All AFSL holders are required to prepare general purpose financial statements from 30 June 2023.
ASIC are continuing to focus on the disclosure of business risks by companies as seen by the latest restatements.
The Corporations Act 2001 previously included grandfathering provisions allowing an exemption to certain companies from lodging their financial statements with ASIC if certain criteria were satisfied.
These companies were still required to prepare financial statements and have them audited.
Legislative changes in August 2022 means that the lodgement exemption was removed for financial years ending on or after 10 August 2022 and therefore previously grandfathered companies will be required to lodge their financial statements with ASIC, making them available for the first time on the public record.
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.