Responding to ASIC areas of focus

In summary:

• For 30 June 2021 reports, ASIC made inquiries of 29 entities on 53 matters, of which 14 matters (26%) related to impairment of non-financial assets, including goodwill and intangible assets, and expected credit losses on loans and receivables
• In addition, revenue recognition, recoverability of deferred tax assets, expense deferral, recognition of make-good provisions and classification of debt as current or non-current also continue to be areas of inquiry
• The review also focused on disclosures of material business risks. As a result ASIC has urged directors to place greater focus on disclosure of material business risks in the Operating and Financial Review (OFR)
• The impact of COVID-19, combined with the uncertainties around recovery, introduces significant challenges in preparing financial reports. It is important to provide clear disclosures of the impacts on the entity, the uncertainties the entity faces and the significant judgements and estimates made in compiling the financial report.

In addition to detailed discussion of the ASIC focus areas and outcomes of ASIC financial report reviews, this publication discusses various matters for entities to consider in responding to those areas, and explores related financial reporting themes.

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