ASIC has issued guidance to entities preparing their December 31, 2008 financial and audit reports, incorporating specific issues identified through the regulator’s review of the June 30, 2008 financial reports.
Under its key areas of focus for the upcoming reporting period, ASIC suggests company directors continue to examine the appropriateness of the going concern assumption in the preparation of financial reports.
This assessment includes having regard to reduced liquidity and ability to refinance debt or raise new funds, as well as compliance with lending covenants.
ASIC recommends directors maintain a strong focus on impairment of intangibles and other assets not reported at fair values, including recently acquired assets, at December 31, 2008.
The regulator said impairment review processes must be robust and transparent so investors can have confidence in reported asset values.
The guidance also advises directors to continue focusing on the use of market information for the December financial reports.
ASIC suggests directors also review the adequacy of their financial instrument disclosures.
Entities should focus on the information needs of external financial report readers and include meaningful disclosures that provide a proper understanding of the business, and the risks being faced, the regulator said.
“We are urging company directors and financial officers to consider this information for inclusion during the upcoming reporting period,” ASIC chairman Tony D’Aloisio said.
