ASIC reviewed the June 2012 financial reports of 320 listed and unlisted entities, with the emphasis of the latter on those entities with larger numbers of users. ASIC's review found financial reporting in Australia is generally of a high standard, with some deficiencies in key areas, and a number of material adjustments have been made.

ASIC announced that its surveillance of December 2012 financial reports of listed entities and other entities with larger numbers of users will include entities with shadow banking activities such as unlisted debenture issuers and selected larger proprietary companies.

Set out below are ASIC's focus areas for the December 2012 review:

• Revenue recognition - including the recognition of rights to future income, and ensuring revenue recognition policies result in revenue being recognised in accordance with the substance of the underlying transaction
• Expenses - ensuring that deferral of expenditure occurs only where the definition of an asset is met, and meeting the requirements of AASB 138 Intangible Assets (equivalent to IAS 38), including expensing start-up, training, relocation and research costs
• Asset values - responding to concerns regarding carrying values of assets, including goodwill, other intangibles and property, plant and equipment.  Also relevant is the disclosure of the key assumptions and associated sensitivity analysis in impairment calculations, the impacts of Australia's carbon tax on impairment, and the need to appropriate account for deferred taxes associated with Australia's Mineral Resource Rent Tax (MRRT)
• Off-balance sheet arrangements - focusing on the non-consolidation of special purpose entities that appear to have been established for the entity’s benefit and investments that have been equity accounted where the investor holds a majority interest
• Going concern - including adequate disclosure of where significant uncertainty exists and why the directors consider the entity to be a going concern
• Non-IFRS financial information disclosures - reviewing non-IFRS financial information disclosures in light of ASIC Regulatory Guide RG 230 Disclosing non-IFRS financial information
• Current - non-current classification - the classification of the entity’s assets and liabilities between current and non-current, focusing on a right of deferral for liabilities and the entity's operating cycle for assets
• Estimates and accounting policy judgements - making material disclosures of sources of estimation uncertainty and significant judgements in applying accounting policies
• Financial instruments - particularly disclosing the methods and significant assumptions used to value financial assets for which there is no observable market data
• New standards - ASIC expects entities to be well advanced in determining the impact of AASB 10 Consolidated Financial Statements, AASB 11 Joint Arrangements and AASB 12 Disclosure of Interests in Other Entities (equivalent to IFRS 10, IFRS 11 and IFRS 12 respectively) and are required to disclose these impacts in their 31 December 2012 financial reports in accordance with AASB 101 Presentation of Financial Statements (equivalent to IAS 1).

Click for ASIC press release (link to ASIC website).