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ASIC has called on auditors and directors to apply “realism and clarity” to financial reports this reporting season.
In a statement, the regulator said it expects companies to adopt realistic asset valuations, appropriate accounting policies and better communication of this information in the lead-up to the end of financial year reporting season.
Announcing its focus areas for 30 June financial reports of listed entities and other entities of public interest with many stakeholders, ASIC highlighted key problem areas to address.
“Directors and auditors should continue to focus on values of assets and accounting policy choices,” the regulator said.
“We continue to see companies use unrealistic assumptions in testing the value of assets or that have applied inappropriate approaches in areas such as revenue recognition,” ASIC Commissioner John Price said.
“We will select financial reports both looking at risk-based criteria and also from a random selection.”
ASIC highlighted asset values, accounting policy choices, material disclosures, the role of directors and client monies as areas of focus.
More information can be found on the ASIC website.
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