ASIC announces financial reporting program

The Australian Securities and Investments Commission (ASIC) has announced the eight areas it will be focusing on during its surveillance program for 31 December 2014 financial reports.

The program covers the financial reports of listed entities and other entities of public interest with many stakeholders and aims to ensure meaningful information is provided to investors and other users.

The eight key areas of focus identified by ASIC are: 

  • Asset values and impairment testing.
  • Amortisation of intangible assets.
  • Off balance sheet arrangements and new standards.
  • Revenue recognition.
  • Expense deferral.
  • Tax accounting.
  • Estimates and accounting policy judgements.
  • Impact of new revenue standard.

“Directors and auditors should focus on values of assets and accounting policy choices, which are important to providing meaningful information for investors and everyone else who uses financial reports,” said ASIC commissioner, John Price.

On making the announcement, ASIC said that even though directors do not need to be accounting experts, they should seek explanation and professional advice supporting the accounting treatments chosen if needed.

The regulator also encouraged, where appropriate, directors to challenge the accounting estimates and treatments applied in the financial report. “They should particularly seek advice where a treatment does not reflect their understanding of the substance of an arrangement,” ASIC said.

Further information on directors and financial reports can be found here.

Further details of the financial reporting requirements can be found here.