ASIC today announced its areas of focus for 30 June 2013 financial reports and released the results of its reviews of 31 December 2012 financial reports of listed entities and of unlisted entities with larger numbers of users.

Focuses for 30 June 2013

ASIC Commissioner John Price said: ‘Preparers of financial reports should ensure that those reports provide useful and meaningful information to the users of that information.

‘This includes providing better quality analysis and information in the operating and financial review, and addressing the impact of new requirements for consolidations and joint arrangements.

‘Preparers should continue to focus on reporting performance in challenging economic circumstances, including focusing on asset values.’

ASIC’s proactive surveillance of financial reports at 30 June 2013 will include entities with shadow banking activities such as unlisted debenture issuers. We will also review the financial reports of selected larger proprietary companies.

At 30 June 2013, directors should focus particularly on:

• Ensuring that the operating and financial review for listed entities provides more useful and meaningful analysis and information for members

• The impact of new accounting standards on consolidated financial statements and joint arrangements

• Impairment of goodwill and other non-current assets

• The value of financial instruments that are not traded in an active market

• Going concern assessments, and

• Revenue recognition and expense deferral policies.

ASIC’s surveillance continues to focus 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.

Findings at 31 December 2012

ASIC’s reviews at 31 December 2012 covered 150 financial reports of listed entities and of unlisted entities with larger numbers of users. We continue to identify deficiencies in some key areas. These include the impairment of goodwill and other non-current assets, non-consolidation of controlled entities, and key disclosures about going concern and the assumptions underlying asset valuations. ASIC has made enquiries of a number of entities and a number of material adjustments have been made to their financial reports.

Further information

More information about focuses for 30 June 2013 financial reports and the findings of ASIC’s reviews of the financial reports of listed entities and of unlisted entities with larger numbers of users are provided in Attachment 1 to this release.

Findings from ASIC’s review of the 30 June 2012 and 31 December 2012 financial reports of 200 proprietary companies are provided in Attachment 2.