ASIC extends financial reporting and AGM relief to December 2020 reporting periods

Action: Consider how the ASIC extensions may impact the delivery timeframes for your December 2020 financial reporting commitments.

ASIC has announced that it:

• Will extend the deadline for both listed and unlisted entities to lodge financial reports (for both full years and half years) under Chapters 2M and 7 of the Corporations Act 2001 by one month for certain balance dates up to and including 7 January 2021 balance dates
• Has adopted a ‘no action’ position where public companies do not hold their Annual General Meetings (AGMs) within five months after the end of financial years that end from 31 December 2019 to 7 January 2021, but do so up to seven months after year end.

The ASX has also announced that they will permit listed entities to take advantage of the extended ASX lodgement deadlines (in respect of audited financial statements) under the ASIC relief. However, ASX listed entities will still need to lodge (unaudited) Appendix 4D/4E in normal timeframes.

We will provide further updates in future monthly emails.

More information: ASIC Media Release 20-276MR ASIC to further extend financial reporting deadlines for listed and unlisted entities and amends ‘no action’ position for AGMs.

Tier 1 models for December 2020

Action: Refer to the latest versions of our model financial statements in the December 2020 reporting season.

We have published our December 2020 Tier 1 model financial statements, which apply to entities with public accountability or choosing to prepare Tier 1 financial statements.

We have changed the way we present our models for the current year. The document now consists of the following sections:

• Guidance – Includes what’s new for the current reporting season, a summary of new and revised pronouncements and reporting deadlines
• Global IFRS model financial statements – The core IFRS disclosures that apply to all
• Appendix 1 – A summary of disclosures that may be impacted by COVID-19 or climate change considerations
• Appendix 2 – Australian-specific requirements.

We will also issue model half-year financial statements, model special purpose financial statements, model Tier 2 (Simplified Disclosures) financial statements and a new Australian financial reporting guide over the coming weeks.

More information: Model financial statements

Improving revenue disclosures

Action: We encourage you to implement improved revenue disclosures in the upcoming reporting season.

To date, many entities’ revenue disclosures under AASB 15 Revenue from Contracts with Customers have been quite simplistic. As a result, ASIC has made several enquiries of entities challenging the adequacy of revenue disaggregation disclosures. In many cases, entities were questioned about apparent inconsistencies in the disaggregation categories selected compared to other (and in many instances more detailed) information available in the market.

The current economic environment resulting from the impact of COVID-19 also serves as a perfect example demonstrating the importance of providing users of the financial statements with appropriately considered disaggregated revenue disclosures.

We have published an edition of our Clarity newsletter, where we consider what is required by the standard, reflect on the disclosures seen in the Australian market, and the response of ASIC thereto. We also provide disclosure examples for entities to consider when preparing their own transparent disclosures.

More information: Clarity publication

Two minute update

Why now? The following publications and developments will be relevant for the December 2020 reporting season.

A quick summary of recent developments:

Updated IFRS in Focus publication on COVID-19 – Key changes include:
Clarification on disclosures for going concern and liquidity risk management
New sections on dividends and capital management and contracts to buy/sell commodities
Added guidance for idle assets in acquisitions and disposals
Clarifications in the sections on share-based payments, government assistance and breach of covenants

• New editions of Purpose-driven Business Reporting in Focus – There are two new editions available:
  This issue includes discussion of the IFRS Foundation Trustees' consultation paper on sustainability standard-setting and global developments
  This issue covers the third annual status report by the Task Force on Climate-related Financial Disclosures
  
  
• A reinforced need for transparency in audit fees – We continue to encourage entities to adopt a transparent approach to the disclosure of audit fees in their financial statements. The Parliamentary Joint Committee on Corporations and Financial Services has released its final report on the regulation of auditing in Australia. Included in the recommendations is the establishment of defined categories and associated fee disclosure requirements in relation to audit and non-audit services
  
  
• ASIC calls on insurers to respond to new insurance standard – ASIC has issued a media release calling on insurers to respond to the pending implementation of AASB 17 Insurance Contracts. The media release notes ASIC’s expectations that insurers will disclose the impacts of AASB 17 in December 2020 financial reports.

Client financial reporting update

Why now? You may have not been able to attend our client financial reporting update and may benefit from the insights and issues discussed in the webcast.

In light of the current situation relating to the COVID-19 outbreak, our November 2020 Client Financial Reporting Update was delivered virtually on 10 November.

The theme of the update was ‘Our Perspectives’. The update was provided via a panel discussion between leading specialists in financial reporting from our assurance and advisory practice. The panel shared thoughts and lessons learnt from the recent reporting season as well as discussing current and emerging reporting issues. We have made a recording of the session available and encourage those interested to access the recording.

More information: Access the webcast recording.