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Australian regulator outlines December 2013 focus areas

  • ASIC (Australian Securities and Investments Commission) (dk gray) Image

30 Oct 2013

The Australian Securities and Investments Commission (ASIC) has released its areas of focus for 31 December 2013 financial reports. The focus areas are largely consistent with prior periods, but include a new focus area on tax accounting.

ASIC generally issues its focus areas each six months, and there is often a lot of consistency in the focus areas from period to period.  The June 2013 focus area on the amortisation of intangible assets has been dropped in the current period.

The current period focus areas are:

  • Disclosure in the operating and financial review (OFR) - ASIC continues its focus on entities considering ASIC Regulatory Guide RG 247 Effective disclosure in an operating and financial review, outlining its position on the contentious area of forward looking information, noting that ASIC "do not expect numerical forecasts", and discussing the linkage between such information and directors' duties and continuous disclosure obligations
  • Off-balance sheet arrangements and new standards - ASIC will focus on the new standards: AASB 10 Consolidated Financial Statements, AASB 11 Joint Arrangements and AASB 13 Fair Value Measurement applying for the first time to annual reporting periods beginning on or after 1 January 2013
  • Revenue recognition and expense deferral - continued review of revenue recognition policies, deferring expenses only where permitted by accounting standards, and appropriate allocation between profit and other comprehensive income
  • Asset values and impairment testing - ensuring entities and auditors apply appropriate scepticism, correctly identify assets and cash-generating units, ensure appropriate sensitivity analysis, continuing focus on entities with substantial assets in emerging economies
  • Going concern - entities should use realistic assumptions, and make appropriate disclosures where significant uncertainties exist
  • Financial instrument values - focus on valuation where value relies on assumptions that are not based on quoted prices or observable market data, and appropriate regard to AASB 13 Fair Value Measurement
  • Tax accounting - proper understanding of tax and accounting treatments, impacts of recent changes in legislation and recoverability of deferred tax assets
  • Estimates and accounting policy judgements - complying with the requirements of AASB 101 Presentation of Financial Statements, ensuring these are "specific to the assets, liabilities, income and expenses of the entity"
  • Non-IFRS financial information - continued compliance with ASIC Regulatory Guide RG 230 Disclosing non-IFRS financial information
  • Related party disclosures - including "disclosing any relevant information on whether the transactions are on an arm’s length basis, and any terms and conditions"

The announcement of the focus areas is not accompanied by an report on ASIC's recent reviews of individual entity financial statements. This report is expected to be issued early in 2014.

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

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