ASIC to focus on inappropriate accounting treatments
Auditors and directors have been put to task regarding accounting treatments used in financial reports, as discrepancies continue to show in ASIC’s latest review.
ASIC’s review of 30 June 2017 financial reports of 220 listed and other public interest entities concluded with inquiries of 50 entities on 54 matters, seeking explanations of accounting treatments.
“The largest number of our findings continue to relate to impairment of non-financial assets and inappropriate accounting treatments,” said ASIC commissioner John Price.
“Directors and auditors should continue to focus on values of assets and accounting policy choices in preparing their 31 December 2017 financial reports.”
According to the corporate regulator, 20 inquiries were made regarding assets values and impairment testing, eight related to revenue recognition, and eight inquiries concerned tax accounting, including income tax.
In impairment and asset values inquiries, ASIC found issues with determining the carrying amount of cash generating units; unsupported or unreasonable use of cash flow and assumptions; and entities failing to make necessary disclosure of sensitive analysis and key assumptions.
ASIC also looked into areas such as expense deferral, consolidation accounting, business combinations, and estimates and accounting policy judgements.
The corporate regulator said that its inquiries of individual entities would not necessarily lead to material restatements, with matters involving 18 of the entities having been concluded without any changes to their financial reporting.