REP 21 Report on the review of 2001 and 2002 annual financial reports of South Australian securities dealers

Released May 2003.

ASIC has held concerns that some licensed securities dealers and some auditors of their accounts are not complying with the Corporations Act and applying the reporting entity test in Australian accounting standards (‘AAS’) appropriately. The accounting standards provide a framework for consistent financial reporting across entities as well as defining certain accounting terms.

Importantly, calculations of Net Tangible Assets (‘NTA’) or Surplus Liquid Funds (‘SLF’) for compliance with licence conditions are based on Balance Sheet (Statement of Financial Position) figures and if they are not prepared in accordance with AAS, there is a risk that these NTA or SLF calculations will be defective.

ASIC conducted a limited regional review of compliance of financial accounts with AAS in accordance with ASIC Information Release 00/25 ‘Reporting requirement for non-reporting entities’ ('ASIC's Release'). That release says in relation to licensed securities dealers:

‘Licensed securities dealers and futures brokers would only be nonreporting entities in rare and exceptional circumstances (eg where a securities dealer does not carry on any business and has no proper authority holders).’

Download REP 21 (PDF 63 KB)

Last updated: 22/05/2003 12:00