Under COVID-19 conditions, ASIC expects directors, preparers of financial reports and auditors to pay particular attention to asset values, provisions, solvency and going concern assessments, events occurring after year-end, disclosures in financial reports, and operating and financial reviews.
Assumptions underlying estimates and assessments should be reasonable and supportable. Assumptions should be realistic, and not overly optimistic or pessimistic.
Disclosures about uncertainties, key assumptions and sensitivity analysis are important to investors.
OFRs should complement the financial report and tell the story of the pandemic’s effects on a business. Underlying drivers of results and financial position should be explained as well as risks, management strategies, and prospects.
Appropriate experience and expertise should be applied in reporting, particularly in more difficult and complex areas such as asset values and other estimates.
Directors and auditors should be given sufficient time to consider reporting issues and to challenge assumptions, estimates, and assessments.
Directors should make appropriate enquiries of management to ensure that key processes and internal controls have operated effectively during periods of remote work.
ASIC has also extended by a month the deadline for lodging financial reports for certain balance dates up to and including 7 January.
If you would like to discuss this further with one of our assurance team members, please contact us.
