ASIC focus for December reporting

The Australian Securities and Investments Commission (ASIC) will be reviewing 31 December 2015 financial reports of listed entities and other entities of public interest based on a “risk-based criteria” as well as through random selection.

In a recently released announcement, ASIC Commissioner John Price stated, “Directors and auditors should continue to focus on values of assets and accounting policy choices.

“We continue to see companies using unrealistic assumptions in testing the value of assets or applying inappropriate approaches in areas such as revenue recognition,” he said.

ASIC has reiterated its advice that “[while] directors do not need to be accounting experts, they should seek explanation and advice supporting the accounting treatments chosen and, where appropriate, challenge the accounting estimates and treatments applied in the financial report.”

According to the announcement, directors should also give consideration to the appropriateness of the following in their financial reporting:

  • Asset values – including impairment of goodwill and other assets, reasonableness of cash flow estimates and the appropriateness of models, assumptions and inputs used to calculate fair values attributed to financial assets;
  • Accounting policy choices – including appropriateness of policy choices for off-balance sheet arrangements, revenue recognition, expense deferral and tax accounting;
  • Material disclosures – including assumptions supporting accounting estimates, significant accounting policy choices, and the impact of new reporting requirements.

For more information, see: