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ASIC finds industry falling behind on new accounting standards

ASIC finds industry falling behind on new accounting standards

The corporate regulator has once again raised alarm bells around the impact of new accounting standards, noting a general “lack of preparedness” by entities from its review of 31 December 2017 financial reports.

Tax&Compliance Jotham Lian 06 July 2018
— 1 minute read

As part of its review of the 31 December 2017 financial reports of 90 listed and other public interest entities, ASIC has made enquires of 17 entities on 20 matters, seeking explanations of accounting treatments.

ASIC’s reviews indicated that most entities that were likely to show material changes to revenue recognition and financial instrument valuation for the financial year commencing 1 January 2018 had not quantified the impact of these standards in the notes to their 31 December 2017 financial statements.

“The number of companies that quantified the impact of coming new requirements for reporting revenue and financial instruments was disappointing,” said ASIC commissioner John Price.

“Directors and preparers should ensure that they understand the impact of new accounting standards and have systems and processes in place to support reporting under these new standards.”

ASIC has previously noted that AASB 9 Financial Instruments (applies from years commencing 1 January 2018); AASB 15 Revenue from Contracts with Customers (applies from years commencing 1 January 2018); AASB 16 Leases (applies from years commencing 1 January 2019); AASB 17 Insurance Contracts (applies from years commencing 1 January 2021) will be of focus for 30 June 2018 financial reports of listed entities and other entities of public interest.

This latest warning comes after a string of notices from the corporate regulator, outlining areas that professionals should be particularly careful with as the new standards come into effect, and having released its focus area late last year.

Of the 20 matters ASIC has sought explanations of, seven relate to revenue recognition, three to asset values and impairment testing, two each to tax accounting, amortisation of intangible assets, classification of liabilities as non-current, business combinations, and other matters.

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ASIC finds industry falling behind on new accounting standards
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