Reporting Update 25RU-01
ASIC has highlighted its focus areas for 31 December 2024 financial reports.
ASIC splits 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 30 June 2024.
The enduring focus areas are supplemented with particular focus areas for the relevant reporting period, which are updated as and when new regulatory requirements or emerging issues arise.
Focus areas are identified from the results of ASIC's integrated financial reporting and audit surveillance program. The program focusses on financial reports of listed entities and other significant public interest entities, such as large proprietary companies and superannuation funds.
All preparers should ensure all relevant aspects are addressed.
Financial reports and audit surveillance program
ASIC reviews 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 related audit files for review by ASIC.
In October 2024, ASIC released its annual financial reporting and audit surveillance report for the 12 months to 30 June 2024.
ASIC reviewed 188 financial reports and 15 related audit files (at 11 audit firms) during the most recent program.
ASIC had findings in 25 of those financial reports, which resulted in entities making adjustments of $1,886 million to previously released financial information.
Most of the financial reports related to listed entities.
Of the 25 entities, 16 also made, or agreed to make, changes to their Operating and Financial Review (OFR) disclosures.
ASIC surveillance findings – 1 July 2023 to 30 June 2024
Overview of the areas in which issues were raised from ASIC’s 2023-24 surveillance program.
Focus areas for 31 December 2024 financial reports
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 in the financial report and OFR
Particular focus areas
No particular focus areas supplementing the enduring focus areas were identified by ASIC for 31 December 2024. However, the particular focus areas for 30 June 2024 were again highlighted in ASIC’s media release and relate to new reporting obligations under the Corporations Act. These areas include:
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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.
We have seen from ASIC’s recent review of financial reports and related enquiries that there continues to be findings of insufficient disclosures, particularly surrounding areas of judgement and the use of estimates. It is not surprising that these remain areas of focus for ASIC. It is crucial that disclosures are useful and meaningful to keep investors informed and maintain market integrity.
Topical reminders
Consolidated Entity Disclosure Statement requirement
ASIC reminded 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 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 to public companies’ financial reports for financial years commencing on or after 1 July 2023, so CEDS will be a new statement for companies with 31 December 2024 financial year ends.
Climate-related financial disclosures
ASIC has reiterated that all entities subject to the sustainability reporting requirements should understand how the new requirements apply to them.
The first group of companies will report for financial years commencing from 1 January 2025. ASIC has urged entities captured to proactively engage with these mandatory climate reporting requirements.
To assist preparers and stakeholders, ASIC has launched a sustainability reporting section on its website. This site provides an overview of the statutory requirements and other sources of information, as well as providing information relating to ASIC’s administration of the regime – how it will administer and enforce the regime in its early years, including its forward work-plan.
ASIC has also consulted on a Draft Regulatory Guide regarding compliance with sustainability reporting obligations, including clarifications on areas of uncertainty. ASIC expects to release the final Regulatory Guide in Q1 2025.
