Reporting Update 24RU-08
ASIC recently announced its 30 June 2024 focus areas and an expanded program to support financial reporting and audit quality.
The program covers listed companies, other public interest entities, previously ‘grandfathered’ large proprietary companies and, from 30 June 2024, superannuation funds.
All preparers (listed and unlisted) should ensure all relevant aspects are addressed.
As part of the program ASIC has split the areas of focus into two separate components, identifying enduring focus areas and particular focus areas. Enduring focus areas apply to all reporting periods. These areas are consistent with those communicated for 31 December 2023. The enduring focus areas are supplemented with particular focus areas for the relevant reporting period, which will be updated as and when new regulatory requirements or emerging issues arise.
Financial reports and audit surveillance program
Focus areas are identified from the results of ASIC’s integrated financial reporting and audit surveillance program. This integrated approach was adopted by ASIC in 2023.
ASIC will review the full-year financial reports of the entities identified above following a risk-based approach taking into account a range of market data, reported financial information, relevant ASX announcements and other ASIC intelligence. The findings from ASIC’s financial reporting surveillances largely determine the selection of audit files for review by ASIC.
The next annual financial reporting and audit surveillance report will be released in October 2024.
We have already seen from recent ASIC media releases the impact of its focus on previously grandfathered large proprietary companies, with companies in this cohort reissuing or restating financial statements in response to ASIC’s review of their financial reports and related enquiries.
Focus areas for 30 June 2024
Enduring focus areas
The enduring focus areas include:
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Asset values
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Provisions
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Subsequent events
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Disclosures – Financial report, OFR, non-IFRS financial information and half-year
Particular focus areas
The particular focus areas supplementing the enduring focus areas for 30 June 2024 relate to new reporting obligations under the Corporations Act:
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Previously ‘grandfathered’ large proprietary companies
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Registrable superannuation entities
Read further discussion on each of these areas, including guidance for preparers to consider in addressing the focus areas, in our Reporting Update.
Topical reminders
Climate-related financial disclosures
ASIC continues to encourage entities with material climate-related risks and opportunities to voluntarily report in line with the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD) and ensure that any statements made are not misleading ahead of forthcoming mandatory climate-related disclosures.
Consolidated Entity Disclosure Statement requirement
ASIC reminds public companies of the new requirement for all listed and unlisted public companies to prepare a Consolidated Entity Disclosure Statement (CEDS) for inclusion in their financial reports. The new disclosure statement requires details of certain tax-related information for all consolidated entities as at the end of the financial year, including names, ownership interests, place of incorporation and tax residency. The amendments apply in relation to any financial reports for a financial year commencing on or after 1 July 2023.
Cyber security
Cyber security risks still pose significant challenges and could have a material impact for particular entities. Where relevant, these risks are required to be disclosed in the OFR.
Greenwashing
In recent releases ASIC has repeated its expectations on sustainability-related disclosures, particularly relating to greenwashing and the ‘reasonable grounds’ basis for making and disclosing sustainability-related commitments and targets.
