ASIC has announced the results from its review of the 31 December 2014 financial reports of 100 listed and other public interest entities. ASIC said that it has made enquiries of 23 entities on 36 matters seeking explanations of accounting treatments. ASIC Commissioner John Price said the largest number of the findings relate to impairment of non-financial assets and inappropriate accounting treatments.
ASIC said that its risk-based surveillance of the financial reports of public interest entities for reporting periods ended 30 June 2010 to 30 June 2014 has led to material changes to 4% of the financial reports of public interest entities reviewed by ASIC. The main changes related to impairment of assets, revenue recognition and expense deferral. ASIC said that it continues to identify concerns regarding assessments of the recoverability of the carrying values of assets, including goodwill, other intangibles, exploration and evaluation expenditure, and property, plant and equipment. The largest number of ASIC’s enquiries at 30 June 2014 related to assets in the mining and renewable energy industries. More broadly, the 36 enquiries made by ASIC related to the following matters:
- impairment and other asset values (10 enquiries);
- off-balance sheet arrangements and business combinations (8);
- revenue recognition (5);
- tax accounting (5);
- non-IFRS financial information (4);
- treatment of expenses (3);
- other (1).
Note that ASIC has recently issued Information Sheet 203 Impairment of non-financial assets: Materials for directors (INFO 203) to assist directors and audit committees in considering whether the value of non-financial assets shown in a company’s financial report continues to be supportable.