ASIC finds inappropriate accounting treatments in financial reports

Today, ASIC released the results from a review of the 31 December 2016 financial reports of 90 listed and other public interest entities, which led to ASIC making enquiries of 23 entities on 28 matters seeking explanations of accounting treatments.

“The largest number of our findings continue to relate to impairment of non-financial assets and inappropriate accounting treatments,” ASIC commissioner John Price said.

“Directors and auditors should continue to focus on values of assets and accounting policy choices in preparing their 30 June 2017 financial reports."

Of the 23 enquiries, 10 were related to impairment and other asset values, five were related to consolidation accounting, three were related to amortisation of intangibles, two were related to revenue recognition, two were related to tax accounting, one was related to business combinations, and the remaining five were related to various other matters.

Matters involving seven of the entities have been concluded without any changes to their financial reporting and ASIC has said that enquiries of the remaining entities will not necessarily lead to material restatements.

ASIC has indicated that its focus areas for 30 June 2017 financial reports will highlight the need for providing information to the market that is useful and meaningful.

Yesterday, ASIC also released the findings of its review into audit firms which found that auditors are failing to find sufficient evidence that the financial report as a whole is free of material misstatement in 25 per cent of key audit areas.