New financial reporting requirements for AFS licensees

On 1 July 2022, ASIC updated Form FS70 Australian financial services licensee profit and loss statement and balance sheet to give effect to the new financial reporting requirements applying from 1 July 2021.

The key developments are:

• Requiring all AFS licensees to prepare general purpose financial statements (GPFS)
  
• ASIC viewing all AFS licensees holding client monies as having public accountability and so they must prepare Tier 1 GPFS
• Requiring a number of specified categories of ‘large or sophisticated’ licensees to prepare Tier 1 GPFS
• Confirming that all AFS licensees are required to present a statement of cash flows in all cases
• Requiring all AFS licensees with controlled entities to present both consolidated and parent entity information when submitting financial statements in accordance with Form FS70 unless they are eligible for consolidation relief
• Providing transitional relief to some entities for their first financial year reporting under the new requirements, and in respect of comparative information in their initial or subsequent financial year.

The application of the requirements and the transitional provisions can be complex. In order to assist AFS licensees understand and apply the new requirements, the attached publication:

• Provides a summary of the new financial reporting requirements
• Explains how the requirements of Form FS70 are applied in practice, including flowchart decision trees for licensees reporting under Chapter 7 and Chapter 2M of the Corporations Act 2001
• Responds to a number of frequently asked questions.

Note: This publication was originally published in July 2022 and updated in September 2022 to reflect changes to Form FS70 and other developments since its original issue.