In ASIC view, at 30 June 2012, directors and auditors should focus particularly on:

• Revenue recognition and expense deferral policies - directors and auditors should review an entity’s revenue recognition policies to ensure that revenue is recognised in accordance with the substance of the underlying transaction, and expenses should only be deferred where there is an asset
• Asset values and the disclosure of associated assumptions - including goodwill, other intangibles and property, plant and equipment, and the impact of Australia's pending carbon tax and mineral resource rent tax
• Off-balance sheet arrangements - particularly in relation to the non-consolidation of special purpose entities that appear to have been established for the entity’s benefit
• Going concern assessments - ensuring disclosures in the financial report give a balanced reflection of the seriousness of the situation
• Operating and financial review (OFR) - ensuring compliance with the law
• Current vs non-current classifications - directors should ensure that classification is consistent with accounting standards and their understanding of the business
• Estimates and accounting policy judgements - ensuring material disclosures of sources of estimation uncertainty and significant judgements in applying accounting policies are made
• Financial instruments - complying with disclosures such as ageing analysis of financial assets, and the methods and significant assumptions used to value financial assets for which there was no observable market data
• New accounting standards - need to make disclosures about AASB 10 Consolidated Financial Statements (equivalent to IFRS 10), AASB 11 Joint Arrangements (equivalent to IFRS 11) and AASB 12 Disclosure of Interests in Other Entities (equivalent to IFRS 12), which will apply for the first time to financial reporting periods beginning on or after 1 January 2013.

Most of the above focus areas have arisen from the findings of its review of financial reports at at 31 December 2011, which covered 120 financial reports of listed entities and those unlisted entities with larger numbers of users.

ASIC is also advising directors and auditors to also focus on disclosures of useful and meaningful information for investors and other users. This includes the disclosure of non-IFRS financial information in accordance with ASIC Regulatory Guide 230 Disclosing non-IFRS financial information (RG 230).

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