ASIC has again released the areas of focus for their 30 June 2010 surveillance program, some of the old favourites are included once again; Going concern, Asset Impairment and Fair Value of Assets.

Given the consistent concerns by ASIC of the lack of disclosure of key assumptions used in asset impairment calculations and when determining the fair value of assets, consideration should be given to the adequacy of your disclosure.  Question - Would a reasonably qualified person be able to make an informed assessment of the item being disclosed based on information contained in the financial report? If not the disclosure is likely to be lacking. 

 

Of interest this period is the focus on disclosure of alternative profit measures in press releases and at times in the financial report. The concern being that the creative spin put in press releases by CEO's and the like are not consistent with the financial statements and how AASB 101 highlights how profit should be reported and what is included in comprehensive and non comprehensive income.

Changes to this standard are new this year so there are always going to be interpretational differences. However, the main concern appears to be with the press releases. If you must use an alternate measure of profit, have a reconciliation back to statutory profit as per the financial report.

 

Summary of areas: (Click for ASIC's full description)

1. Going concern
2. Asset impairment
3. Fair value of assets
4. Off balance sheet exposures
5. Financial instruments
6. Current vs non-current classifications
7. Other issues related to current market conditions
8. Non-statutory profits
9. Operating and financial review
10. Segment reporting
11. Financial statement disclosure
12. Business combinations
13. Employee share plan loans

If you want to discuss any of the above please contact me on 9275 0133. 

Yours faithfully,