ASIC notes the decision by Capitol Health Limited to restate comparative figures for the year ended 30 June 2019 in its financial report for the year ending 30 June 2020 by derecognising goodwill of $5.3 million. Profit before tax for the 30 June 2019 year will be reduced by $4.4 million and a deferred consideration liability will be reduced by $0.9 million.
ASIC had previously made inquiries in relation to the accounting for business combinations during the year ended 30 June 2019.
Directors are primarily responsible for the quality of an entity’s financial report. This includes ensuring that management produces quality information on a timely basis. Companies must have appropriate processes, records and analysis to support information in the financial report.
Companies should apply appropriate experience and expertise to financial reporting, and to the processes and analyses supporting the information in the financial report. This is particularly important for potentially complex areas such as accounting for business combinations.