ASIC Focus Areas for Year End Financial Reports

ASIC GREY
12
Jun

ASIC Focus Areas for Year End Financial Reports

12.06.14

On 30 May 2014 ASIC announced its planned surveillance program for 30 June 2014 financial reports. ASIC will examine listed entities and other entities of public interest, with a large number and wide range of stakeholders considering factors like the nature and size of the business and the number of its employees.

 

In conducting their review they will focus on the following key areas:

1. Impairment testing and asset values - focusing on the recoverability of goodwill intangibles and property plant and equipment

2. Amortisation of intangible assets

3. Off-balance sheet arrangements and new standards ‑ AASB 10 Consolidated Financial Statements, AASB 11 Joint Arrangements, AASB 12 Disclosure of Interests in Other Entities and AASB 13 Fair Value Measurement

4. Revenue recognition

5. Expense deferral

6. Tax accounting

7. Disclosure of estimates and accounting policy judgments

 

THE ROLE OF PREPARERS AND AUDITORS

ASIC encourages those responsible for preparing and auditing financial reports to carefully consider the following:

  • Impairment of goodwill and other assets focusing on assumptions used and relationship between the cash flows being used and the assets being tested.

  • Appropriateness of accounting policy choices, including revenue recognition, expensing of costs that should not be included in asset values, and the impact of new requirements for consolidations and joint arrangements.

 

THE ROLE OF DIRECTORS

Directors do not need to be accounting experts; however bearing in mind their knowledge of the business, its assets, and the future prospects, they should:

  • Challenge the accounting estimates and treatments applied in the financial report, and
  • seek explanations or professional advice supporting the accounting treatments chosen, particularly where a treatment does not reflect their understanding of the substance of an arrangement.

 

For further information please call your ESV Engagement Partner on 9283 1666 to arrange a consultation.

 

Article by Lisa Brink