Understand and respond to ASIC’s new integrated approach to financial reporting and audit surveillance
ASIC has released a report outlining the outcomes of its financial reporting and audit surveillance for the year ending 30 June 2023.
What is the background to the report?
The report, Annual financial reporting and audit surveillance report 2022-23, is the first delivered under a new approach to surveillance adopted by ASIC in the past 12 months. ASIC now releases a single report covering financial reporting and auditing matters in respect of each 12 month period, whereas before ASIC would release media releases in respect of financial reporting surveillance programs for each of the June and December reporting periods. Additionally, ASIC would release an annual inspection report over its audit surveillance.
The new approach reflects changes in the way in which ASIC undertakes its surveillance – reflecting a data-led risk-based approach that integrates financial reporting and audit surveillance.
The new approach uses market data, reported financial information, ASX announcements, ASIC intelligence, section 311 notices lodged by auditors, external party misconduct reports and specific industry considerations. In addition, ASIC has focused audit surveillance where entities changed their financial reporting in response to ASIC’s financial reporting surveillance.
The new approach is consistent with previous ASIC’s announcements and the ASIC Corporate Plan 2023-27 – Focus 2023-24, which notes a focus on data and natural language processing in financial reporting and audit surveillance.
For the first time, the report also provides more information about the industries subject to surveillance, and ASIC’s considerations on how it develops its focus areas.
What were the outcomes of ASIC’s surveillance?
The report notes that ASIC reviewed 180 financial reports – 156 listed entities and 24 large unlisted entities considered to be ‘of public interest’ – covering years ended from 31 March 2022 to 28 February 2023. ASIC contacted 55 entities and raised 93 issues, resulting in:
- 25 findings covering 29 issues where ASIC raised a media release because the company subsequently amended its financial report or financial information. This resulted in a review of 15 audit files
- 58 issues closed without further action
- 6 remaining open surveillances.
The issues raised covered the following topics: