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ASIC has announced its focus areas for EOFY financial reports of listed entities and other entities of public interest, including compliance with three impending accounting standards.
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ASIC issues reminder on new accounting standards
01 June 2017
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Ahead of the end of financial year, ASIC has called on listed entities and other entities of public interest to focus on giving useful and meaningful information, as well as justification of their accounting policy choices, in their financial reports.
“As with previous reporting periods, directors and auditors should focus on values of assets and accounting policy choices,” said ASIC commissioner, John Price.
“ASIC continues to see companies use unrealistic assumptions in testing the value of assets or apply inappropriate approaches in areas such as revenue recognition.”
ASIC reminded that some major new accounting standards will have the greatest impact on financial reporting since the adoption of International Financial Reporting Standards in 2005.
AASB 9 Financial Instruments and AASB 15 Revenue from Contracts with Customers and apply from 1 January 2018, while AASB 16 Leases applies from 1 January 2019, however early adoption is permitted.
The three new standards will significantly affect the reporting of revenue, the values of financial instruments, loan loss provisions and the impact of lease arrangements.
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ASIC has said that directors and management must plan for these new standards and inform investors and other financial report users of the impact on reported results.
This includes making required disclosures on the impact of the standards in notes to the financial report.
As part of ASIC's Financial Reporting Surveillance Program, some financial reports will be selected for review, based on risk-based criteria and at random, to determine compliance with the Corporations Act and accounting standards.
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