ASIC has reprimanded businesses for failing to accurately prepare financial reports, resulting in a number of inquiries by the regulator.
ASIC yesterday announced the results from a review of 30 June 2013 financial reports that covered 280 listed and other public interest companies.
The June 2013 annual reports are the first since ASIC released guidance on the operating and financial review in March 2013.
Since then there have been significant improvements in the quality of disclosures in the OFR, said ASIC, however some entities need to improve the description of the entity’s business and the underlying drivers of reported results.
Preparers of financial reports should ensure that they provide high standard, useful and meaningful information, said ASIC Commissioner John Price.
“While the quality of financial reporting in Australia is comparable with other major jurisdictions, we continue to identify matters such as inadequate impairment of assets and inappropriate recognition of revenue in some cases.”
To date, ASIC has made inquiries on 70 entities on 100 matters. Over a third of these inquiries related to impairment and other asset values.
“As a result of ASIC inquiries, a number of entities have made significant impairment write-downs and will improve their disclosures on matters such as key assumptions,” said the regulator.
A further 14 were related to revenue recognition. Material adjustments have been made by some entities that had prematurely recognised revenue, said ASIC.
ASIC’s reviews are now almost complete although a small number of additional queries may be made.