With the persistence of the COVID-19 pandemic this year, the Australian Securities and Investments Commission (ASIC) has released the focus areas for financial reports under COVID-19 conditions for the period ending December 31, 2021.
ASIC will conduct its regular review of the full-year financial reports of selected larger listed entities and other public interest entities on December 31, 2021. Directors, preparers of financial reports, and auditors must focus on the following key areas for financial reporting under COVID-19 conditions:
ASIC Commissioner Sean Hughes said companies will be affected differently depending on their industry, where they operate, how their suppliers and customers are affected, and other factors as COVID-19 conditions persist.
“The changing environment in which each company operates will affect its strategies and its assumptions about the future performance of its assets and businesses,” said Hughes. “It remains more important than ever that investors and markets are properly informed through a company's financial reports and related disclosures about underlying drivers of results, key assumptions, strategies, future prospects, and risks in both full-year and half-year reports.”
During the previous release of focus areas for financial reporting under COVID-19 conditions for the period ending June 30, 2021, ASIC Commissioner Cathie Armour emphasised the importance of submitting high-quality financial reports and related disclosures to keep investors informed.
For the financial reports in December, ASIC said entities must apply appropriate experience and expertise in their reporting and audit process, particularly in more difficult and complex areas, such as asset values and other estimates.
It advised directors to make appropriate management enquiries to ensure that key processes and internal controls have operated effectively during periods of remote work. They, along with auditors, should have sufficient time to consider reporting issues and challenge assumptions, estimates, and assessments.
However, ASIC has extended the deadline for unlisted entities to lodge financial reports by one month for balance dates from December 24, 2021, to January 07, 2022 – inclusive given possible pressures on audit firm staff resources.
