Earlier this week, the Australian Securities and Investments Commission (ASIC) released findings from their review of last year’s financial reports and found there has not been enough attention paid to non-financial assets.
“Directors and auditors need to focus on impairment of non-financial assets in financial reports to ensure the market is properly informed about asset values and the expected future performance implied by those values. We continue to find instances where companies have made unrealistic and unsupportable assumptions about future cash flows,” a spokesperson from ASIC said.
This comes after a review of the financial reports of 125 entities.
ASIC reviewed 85 full-year reports and 40 half-year reports, with a focus on the new major accounting standards. These reviews resulted in the regulator enquiring on 40 matters from 36 different entities.
ASIC have since indicated that their risk-based surveillance approach from 2010 to 2018 has only showed a four per cent material change in the reports that have been reviewed.
Matters about which the regulator needed to enquire: