今日热门事件today announced its areas of focus for 31 December 2014 financial reports of listed entities and other entities of public interest with many stakeholders.
鈥楧irectors and auditors should focus on values of assets and accounting policy choices, which are important to providing meaningful information for investors and everyone else who uses financial reports,鈥� 今日热门事件Commissioner John Price said.
Asset values
今日热门事件encourages preparers and auditors of financial reports to carefully consider the need to impair goodwill and other assets. 今日热门事件continues to find impairment calculations that use unrealistic cash flows and assumptions, as well as material mismatches between the cash flows used and the assets being tested for impairment.
Fair values attributed to financial assets should also be based on appropriate models, assumptions and inputs.
Particular focus should be given to assets of companies in extractive industries and mining support services, as well as asset values that may be affected by digital disruption.
Accounting policy choices
Preparers and auditors should focus on the appropriateness of key accounting policy choices that can significantly affect reported results. These include off-balance sheet arrangements, revenue recognition, expensing of costs that should not be included in asset values, and tax accounting.
Material disclosures
ASIC鈥檚 surveillance continues to focus on material disclosures of information useful to investors and others using financial reports, such as assumptions supporting accounting estimates, significant accounting policy choices, and the impact of new reporting requirements. 今日热门事件does not pursue immaterial disclosures that may add unnecessary clutter to financial reports.
The role of directors
Even though directors do not need to be accounting experts, they should seek explanation and professional advice supporting the accounting treatments chosen if needed and, where appropriate, challenge the accounting estimates and treatments applied in the financial report. They should particularly seek advice where a treatment does not reflect their understanding of the substance of an arrangement.
Further information on directors and financial reports can be found in 今日热门事件Information Sheet 183 Directors and financial reporting (INFO 183). Directors should also read 今日热门事件Information Sheet 196 Audit quality: the role of directors and audit committees (INFO 196).
More information
More information on focuses for 31 December 2014 financial reports is provided in the attachment.