Key reminders during reporting season

Key actions: Please keep these in mind during this reporting season.

With the COVID-19 situation evolving in the past month, we highlight the following considerations:

• Going concern – Unlike for other assessments such as impairment and expected credit losses which are based on conditions at reporting date, the need to consider whether an entity is a going concern or not does not end at the reporting date but instead extends to the period up until the financial statements are finalised. For more information, see our What is the impact of COVID-19 on your going concern assessment? publication
• Impact on the reporting timetable – COVID-19 restrictions and available resources may mean that meeting originally scheduled reporting deadlines may be difficult. Some entities may wish to consider the extended reporting deadlines made available by ASIC and ASX Limited. For more information, see our Clarity publication, Revised financial reporting deadlines for 30 June 2021
• Transparency – Clear disclosures in light of the ongoing uncertainties around the current COVID-19 outbreaks are critical to ensure users understand how the situation impacts the entity and how it has been reflected in the financial statements. Some considerations include:
• Explaining the impacts of government support arrangements such as JobKeeper and more recent programmes, particularly in light of media and stakeholder interest in this area
• Disclosure of key judgements, estimates and assumptions made when preparing the financial statements and how the COVID-19 outbreaks have impacted those judgements
• The need for disclosure of material non-adjusting events arising after the reporting date
• Clear and focused disclosures in the Operating and Financial Review (OFR), including of relevant developments after the reporting period
• Considering the need for continuous disclosure of major events, impacts or other developments.

Tip. Our Tier 1 model financial statements contain a summary of key considerations in the current financial reporting process, which includes a full listing of COVID-19-related resources (section 3.2.3 in the Australian specific guidance section).

Two minute update

Why does it matter?

Ensure you are aware of the latest developments and consider their impacts on your organisation.

A summary of recent developments:

• Continuous disclosure and electronic meetings – Parliament has passed amendments to the Corporations Act 2001 to:
  • Make permanent the temporary changes to Australia’s continuous disclosure laws originally made in May 2020 in response to the COVID-19 pandemic. Companies and their officers will only be liable for civil penalty proceedings in respect of continuous disclosure obligations where they have acted with “knowledge, recklessness or negligence” (Treasurer media release)
  • Allow companies to hold virtual meetings and use electronic communications to send meeting-materials and execute documents until 31 March 2022, pending legislation to make the changes permanent (Treasurer media release). This will replace and extend the relief provided by the ASIC ‘no-action’ position released in March 2021
  • Give ASIC power to provide short-term relief from the requirement to hold meetings at a physical location, extend the timeframe for holding a meeting, or to give documents in hard copy in certain circumstances (supplementary explanatory memorandum)
• Financial reporting by subsidiaries – The IASB® has released proposals for reduced disclosures by subsidiaries. The proposals are based on the IFRS for SMEs® standard and are similar to the AASB’s Simplified Disclosures. However, there are differences between the IASB proposals and AASB 1060 General Purpose Financial Statements – Simplified Disclosures for For-Profit and Not-for-Profit Tier 2 Entities and the AASB may propose changes to AASB 1060. We will monitor progress and update you as this develops. More information about the IASB proposals can be found in our IFRS in Focus publication, IASB proposes reduced disclosures for subsidiaries without public accountability
• Not-for-profit resources – The June 2021 reporting season is expected to be a challenging period for many not-for-profit entities as they continue to navigate through the post-implementation issues of income and lease accounting in addition to more recent developments. We have released a Clarity publication, Not-for-profit financial reporting for June 2021, to assist not-for-profit entities in the current reporting season.