ASIC Commissioner, Mr John Price said ‘Preparers of financial reports should continue to focus on reporting performance particularly in challenging economic circumstances. Focus areas include recognition of revenue and expenses, asset values and going concern.
‘Our proactive surveillance of financial reports of listed entities and other entities with larger numbers of users will include entities with shadow banking activities such as unlisted debenture issuers. We will also review the financial reports of selected larger proprietary companies’, Mr Price said.
At 31 December 2012, directors and auditors should focus particularly on:
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revenue recognition and expense deferral policies
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asset values and the disclosure of associated assumptions
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off-balance sheet arrangements, and
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going concern assessments.
Directors and auditors should also focus on disclosures of useful and meaningful information for investors and other users. This includes the disclosure of non-IFRS financial information (i.e. financial information determined other than in accordance with the International Financial Reporting Standards (IFRS) that have been adopted in Australia) in accordance with ASIC Regulatory Guide 230 Disclosing non-IFRS financial information (RG 230).
ASIC’s reviews at 30 June 2012 covered 320 financial reports of listed entities and those unlisted entities with larger numbers of users. While financial reporting in Australia is generally of a high standard, ASIC continues to identify some deficiencies in key areas. ASIC has made inquiries of a number of entities and a number of material adjustments have been made.
ASIC’s surveillance focuses on material disclosures of information useful to investors and other users of financial reports. ASIC does not pursue immaterial disclosures that may add unnecessary clutter to financial reports.
More information about focuses for 31 December 2012 financial reports and the findings of ASIC’s reviews of the financial reports for the periods ended 30 June 2012 are provided in the attachment to this release.