ASIC has now announced its focus for 30 June 2019 financial reports, with new accounting standards on revenue recognition and financial instrument values now needed to be complied with.
The future impact of AASB 16 Leases, accounting for insurance businesses, and new definition and recognition criteria for assets, liabilities, income and expenses will also need to be disclosed in full-year reports at 30 June 2019.
ASIC commissioner John Price said the regulator will be reviewing more than 200 full-year financial reports at 30 June 2019 to promote quality financial reporting and useful and meaningful information for investors.
“New accounting standards can significantly affect results reported to the market by companies, require changes to systems and processes, and affect businesses,” Mr Price said.
“It is important that directors and management ensure that companies inform investors and other financial report users of the impact on reported results. Required disclosure on the effect of the new standards is more extensive than that made by many companies for the 31 December 2018 half-year.”
Despite the warning, a new survey of over 60 senior finance professionals by LeaseAccelerator has found that almost one-third of companies are behind schedule or have not started projects to meet the AASB 16 Leases deadline.
The new leases standard will bring all leases onto the balance sheet and apply a new measurement basis.
The survey also found that 85 per cent of respondents said the project had turned out to be more complex than they anticipated, with 61 per cent finding the project more complex than the new revenue recognition standard AASB 15.
“The strong lesson we have learnt from UK and US companies is that day one is just the first step — not the end point,” said Michelle Laybutt, LeaseAccelerator VP solution consulting, ANZ and South East Asia.
“These reporting requirements need to become a fundamental part of business-as-usual or companies will find themselves in the same tangle every reporting cycle. It’s a very profound change that involves multiple business areas including IT, treasury, finance and procurement, and while companies may be ready to submit those initial reports, it’s the day two and beyond where we have seen them having to take a second look.”
Data collection has been the biggest challenge for local companies (55 per cent), with IT, lease and equipment leases proving most difficult (50 per cent).
Earlier this year, LeaseAccelerator estimated that up to $100 billion of liabilities would be brought onto the balance sheets of the top 100 listed companies in Australia.