17RU-006 ASIC focus areas: 31 December 2017 | KPMG | AU
Share with your friends

17RU-006 ASIC focus areas: 31 December 2017

17RU-006 ASIC focus areas: 31 December 2017

ASIC has released its areas of focus for 31 December 2017 reporting. While focus areas are consistent to prior reporting periods, all preparers (listed and unlisted) need to ensure all relevant aspects are addressed.


Also on KPMG.com

New accounting standards

In its regular call on preparers to focus on quality financial reporting – providing information that is useful and meaningful for users – ASIC has directed its comments to addressing the impacts of the major new accounting standards, particularly the two with the closest application date. The two relevant accounting standards are AASB 9 Financial Instruments and AASB 15 Revenue from Contracts with Customers. Both these standards have a date of initial application of financial years beginning on or after 1 January 2018 – the day following the end of the upcoming reporting period.

These new standards implement new requirements for two of ASIC’s pervasive areas of focus in recent years, the recognition of revenue and the valuation of financial instruments.

ASIC is concerned at the lack of meaningful disclosures to investors and users of financial reports on the impacts of these standards to date. With their application imminent, ASIC has increased the urgency of its call for action in implementing the requirements. ASIC will be keenly noting the disclosures of the impacts that are required to be made for accounting standards that are issued but not yet effective. The standards do not only have an accounting impact, but systems and processes impacts too.


“The new standards will also have a broad business impact, for example systems and processes and compliance with financial condition requirements. It is important that directors and management ensure that entities are prepared for these new standards and inform investors and other financial report users of the impact on reported results. Therefore like ASIC, we urge companies to progress their implementation projects relating to the new standards as a priority.

The nature and extent of possible impact disclosures will be dependent on how advanced management is with the implementation of its transition plan. However, the aim is for companies to progressively enhance the disclosures as new accounting policies are defined, estimation uncertainty reduces and the effective date of the new standards approaches.

Quantitative information may well be given only in the form of an impact range or a number that is appropriately caveated. However, where quantitative information is not yet available, then qualitative information like for example, the types of transactions, assets and liability balances impacted, and the key implementation issues that the company is working through would be expected to be disclosed.”

Michael Voogt
Director, Department of Professional Practice

Focus areas for 31 December 2017

Once again ASIC has confirmed the three broad areas of focus as:

  • accounting estimates (which include impairment testing and asset values)
  • accounting policy choices
  • key disclosures.

Further details are outlined in our guide – ASIC areas of focus: Guide for directors and preparers (PDF 169KB).

Asset values and related impairment testing is still high on ASIC’s matters for attention. ASIC continues to question entities on both the bases of impairment calculations and the disclosures relating to models, assumptions and inputs. In the first half of the 2017 calendar year, a number of companies have adjusted asset valuations, with the total adjustments impacting reported profit by over $700 million.

ASIC also questioned a number of preparers on the approaches used for revenue recognition in their financial reports.

Directors have a primary responsibility

ASIC reminds directors of their primary responsibility for the quality of the financial report. Timely information that is well documented support, and been through appropriate analysis to enable independent audit thereof will promote high quality financial information being available to the market. Having access to appropriate expertise, especially in areas of complexity and judgement; and holding management to account for preparing timely and supported financial information is critical to achieving this quality.

ASIC also suggests that the Operating and Financial Review required by listed companies provides a platform for directors to consider including relevant information relating to current challenges facing companies. These include digital disruption, new technologies, climate change or cyber-security.

Enhanced audit reports

Enhanced audit reports provide users of financial reports with details of those matters that required significant audit attention in performing the audit. ASIC reminds directors and preparers to be mindful that the key audit matters described by the auditor may correlate to ASIC’s focus areas, and that disclosures around these matters may require additional attention.

ASIC expects clear and understandable descriptions of key audit matters and the work performed around these matters. Key audit matters should also be specific to the circumstances of the company and the audit – not a generic, boilerplate comment.

Connect with us


Request for proposal