Dec 2021 - ASIC Review of 150 listed entities

https://asic.gov.au/about-asic/news-centre/find-a-media-release/2021-releases/21-354mr-asic-review-of-30-june-2021-financial-reports/ 

Summary

1. 150 entities reviewed
2. Annual financial reporting to 30 June 2021
3. 53 matters found, over 29 entities (listed in table below)
4. 19% of entities had matters to explain..........

The largest numbers of matters relate to:

1. Impairment of assets:
   1. ASIC’s inquiries on assessments of the recoverability of the carrying values of assets, including goodwill, other intangibles, and property, plant and equipment include: (a) Reasonableness of cash flows and assumptions: There continue to be cases where the cash flows and assumptions used by entities in determining recoverable amounts are not reasonable or supportable having regard to matters such as historical trading results and the impact of and uncertainties due to COVID-19 conditions. (b) Disclosures: ASIC still finds some entities that are not making the necessary disclosure of:
      • key assumptions, including discount rates and growth rates;
      • for fair value less costs to dispose, the valuation techniques and inputs used; and
      • the events and circumstances leading to a reversal of previous impairment losses, including key assumptions.
2. Business risks in the operating and financial review:
   1. ASIC raised several inquiries with entities about the adequacy of disclosure of risks to a company’s strategy and future financial prospects outlined in their operating and financial review
3. Revenue recognition:
   1. ASIC made inquiries of six entities about revenue recognition. In one instance, we inquired about the timing of revenue recognition for the online sale of goods and whether control had passed to the customer at the time of dispatch. In another case, ASIC made inquiries about the nature and recognition of various fees for providing finance. ASIC also inquired of an entity about whether labour hire services were provided as principal or agent. This matter was resolved with no changes to the financial report following further information and explanations from the entity.