ASIC notes the decision by LawFinance Limited (LawFinance) to recognise impairment write-downs of $40.9 million to goodwill and $12.6 million to deferred tax assets in its financial report for the year ended 31 December 2020.

ASIC had made inquiries on the recoverability of goodwill and deferred tax assets in LawFinance’s financial report for the year ended 31 December 2019 and half-year financial report for the period ended 30 June 2020.

As outlined in ASIC media release 20-325MR, ASIC highlights focus areas for 31 December 2020 financial reports under COVID-19 conditions, ASIC expects directors and preparers of financial reports to pay particular attention to asset values when preparing their financial reports.

Directors are primarily responsible for the quality of an entity’s financial report. It is the director’s responsibility to ensure management produces quality financial information on a timely basis. Companies must have appropriate processes, records and analysis to support information contained in their reports.

Companies should apply appropriate experience and expertise, particularly in more difficult and complex areas of accounting policies and estimates, when completing their financial reports.