ASIC today announced the results from a review of the 31 December 2017 financial reports of 90 listed and other public interest entities.
Arising from that review, ASIC has made enquiries of 17 entities on 20 matters, seeking explanations of accounting treatments.
ASIC Commissioner John Price said, ‘The number of companies that quantified the impact of coming new requirements for reporting revenue and financial instruments was disappointing. 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.’
Our risk-based surveillance of the financial reports of public interest entities for reporting periods ended 30 June 2010 to 30 June 2017 has led to material changes to four per cent of the financial reports of public interest entities reviewed by ASIC. The main changes related to impairment of assets, revenue recognition and expense deferral.
Enquiries of individual entities will not necessarily lead to material restatements. Matters involving three of the entities have been concluded without any changes to their financial reporting.
ASIC generally does not pursue immaterial disclosures that may add unnecessary clutter to financial reports.
Announcements of material changes
ASIC publicly announces when a company makes material changes to information previously provided to the market following enquiries by ASIC. In addition to improving the level of market transparency, these announcements are intended to make directors and auditors of other companies more aware of ASIC’s concerns so that they might avoid similar issues.
Since the last release on findings in December last year, ASIC has issued media releases in relation to changes by Genworth Mortgage Insurance Australia Limited, Medusa Mining Limited, Intrepid Mines Limited, Sequoia Financial Group Limited, Pacific Current Group Limited, Myer Holdings Limited, and Orica Limited. The total adjustments to profit for these changes exceeds $750 million.
Enhanced audit reports
Auditors are required to issue enhanced audit reports for listed entity audits that describe key audit matters requiring the most attention in the audit. We continued to find that some key audit matters were described in general terms rather than being specific to the circumstances of the entity. In some cases, the audit procedures performed were not clearly described.
