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ASIC has announced its areas of focus for its 30 June 2014 financial reports.
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Regulator reveals areas of focus
30 May 2014
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In a statement released Friday, the regulator encouraged preparers and auditors of financial reports to carefully consider the need to impair good will and other assets.
Preparers and auditors should also focus on the appropriateness of key accounting policy choices that can significantly affect reported results, according to the ASIC statement.
Accounting policies highlighted include revenue recognition, expensing of costs that should not be included in asset values, and the impact of new requirements for consolidations and joint arrangements.
ASIC also highlighted its expectations of directors in financial reporting.
“Even though directors do not need to be accounting experts, they should challenge the accounting estimates and treatments applied in the financial report, seek explanations and seek appropriate professional advice supporting the accounting treatments chosen, particularly where a treatment doesn't reflect their understanding of the substance of an arrangement”.
To ensure that financial reports are of high quality, and that useful and meaningful information is provided to users of financial reports, ASIC says entities should:
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• have a culture focused on quality financial reporting;
• have adequate governance arrangements, and processes and controls;
• ensure the financial literacy of directors is appropriate;
• apply the accounting standards;
• apply appropriate experience and expertise to financial reporting, and the underlying processes supporting the information in the financial report, including engaging external experts where appropriate; and
• consider accountability and internal incentives for company management that are focused on financial reporting quality.
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