With just under three weeks to go to the end of the 2020-21 financial year, corporate regulator ASIC has revealed its hit list for June 30 reporting companies.
It’s a handy checklist from the regulator that’s issued twice a year and has the handy outcome of putting listed companies on notice.
ASIC says the checklist comes with the proviso that the markets are still in the time of Covid, but these are going to be the areas the regulator will be focusing on
ASIC said it expects directors, preparers of financial reports and auditors to pay attention to: ‘Asset values, provisions, solvency and going concern assessments, events occurring after year end and before completing the financial report and disclosures in the financial report and Operating and Financial Review (OFR).’
ASIC Commissioner Cathie Armour said in the statement, ‘As COVID-19 conditions continue to evolve, the quality of financial reports and related disclosures remain more important than ever for keeping investors informed.
‘The circumstances of companies and the environment in which they operate can change significantly from one reporting period to the next. This could significantly affect assessments of asset values and financial position.
‘Disclosing key assumptions, risks, the drivers of results, management strategies and future prospects will be important for investors and other users of financial reports. This includes both full-year and half-year reports.’ (Half year reporters at June 30 include Rio Tinto and OZ Minerals)
ASIC said that “entities may continue to face some uncertainties about future economic and market conditions, and the future impact on their businesses.”
“Assumptions underlying estimates and assessments for financial reporting purposes should be reasonable and supportable. Assumptions should be realistic, and not overly optimistic or pessimistic.
“Useful and meaningful disclosures about business impacts and potential uncertainties will continue to be vital. Uncertainties may lead to a wider range of valid judgements on asset values and other estimates.
“These uncertainties may change from period to period. Disclosures in the financial report about uncertainties, key assumptions and sensitivity analysis will be important to investors.
“The OFR should complement the financial report and tell the story of how the entity’s businesses are impacted by the COVID-19 pandemic. The underlying drivers of the results and financial position should be explained, as well as risks, management strategies and future prospects,” ASIC said.
ASIC has extended the deadline for both listed and unlisted entities to lodge financial reports under Chapters 2M and 7 of the Corporations Act 2001 by one month for balance dates from 23 June 2021 to 7 July 2021 inclusive.
The extended deadlines will assist with any pressures on resources for the audits of smaller entities and provide adequate time for the completion of the audit process given challenges presented by COVID-19 conditions.
“When deciding whether to depart from the normal statutory deadlines, directors should consider the information needs of shareholders, creditors and other users of their financial reports, as well as meeting borrowing covenants or other obligations.” ASIC warned.