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Clarity in financial reporting monthly newsletter
January 2021 edition
Our monthly Clarity in financial reporting newsletter informs you of key focus areas in financial reporting for the month: actions, developments, and dates.
In this issue
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ASIC extends financial reporting and AGM relief to December 2020 reporting periods
Action: Consider and respond to the ASIC focus areas in the December financial reporting period.
ASIC has released its focus areas for full-year and half-year financial reports for 31 December 2020.
Under COVID-19 conditions, ASIC expects directors, preparers of financial reports and auditors to pay particular attention to:
- Asset values - including impairment of non-financial assets, values of property assets, expected credit losses on loans and receivables and the values of other assets
- Provisions - including onerous contracts, financial guarantees given and restructuring
- Solvency and going concern assessments - the attachment to the media release provides a series of factors to consider
- Events occurring after year end and before completing the financial report
- Disclosures in the financial report and Operating and Financial Review (OFR) - the attachment to the media release covers a broad range of areas where disclosures are expected, including the expectation of prominent disclosure of material support or assistance from government, lenders, landlords and others and clear explanation of non-IFRS measures.
Some other highlight points from the release include:
- ASIC expects useful and meaningful disclosures in both full-year and half-year financial reports about the business impacts (both positive and negative) and potential uncertainties surrounding COVID-19 (and more broadly) will continue to be vital - including disclosures in the financial report about uncertainties, key assumptions and sensitivity analysis. More information can be found in our IFRS in Focus publication on COVID-19 and the ‘what’s new’ section of our Tier 1 and half-year model financial statements
- The reporting process should ensure appropriate experience and expertise is applied and consider that directors and auditors should be given sufficient time to consider reporting issues and to challenge assumptions, estimates and assessments
- ASIC will conduct its regular review of full-year financial reports of selected larger listed entities and other public interest entities as at 31 December 2020 and will focus on entities and industries adversely affected by current conditions.
More information: ASIC Media Release 20-325MR ASIC highlights focus areas for 31 December 2020 financial reports under COVID-19 conditions, Clarity publication Regulatory focus areas – financial reporting in a COVID-19 environment.
Further update on extended December 2020 reporting deadlines
Action: Consider how the ASIC and ASX extensions may impact the delivery timeframes for your December 2020 financial reporting.
In late December 2020, the ASX released Class Waiver Decision – Extended Reporting and Lodgment Deadlines, to give effect to its announced intention to permit listed entities to take advantage of the extended ASIC lodgement deadlines for reporting periods ending on or before 7 January 2021.
Consistent with the extensions at June 2020, where an entity intends to avail itself of the extended deadlines under ASIC Corporations (Amendment) Instrument 2020/1080, the ASX waiver requires:
- The lodgement of unaudited full-year or half-year accounts with the ASX. Where the entity is required to lodge an Appendix 4E or Appendix 4D, the accounts will be included in the Appendix 4E, or together with the Appendix 4D, which must be lodged within two months of the reporting date (i.e. the usual deadline). Mining exploration entities and oil and gas exploration entities do not lodge an Appendix 4E or Appendix 4D and must instead lodge unaudited or unreviewed full-year or half-year accounts within three months and 75 days (respectively) of the reporting date
- The making of an announcement to the ASX that the entity is relying on the ASIC relief to extend the lodgement date and agreeing to make a further announcement if material differences arise between the unaudited or unreviewed accounts and its audited or reviewed accounts. This announcement must be made together with, or prior to, lodgement of the unaudited or unreviewed documents.
As a result of these developments, we have updated our Clarity publication on the revised deadlines – which provides an easy-to-follow summary of the deadlines for December 2020 reporting periods. The deadlines included in the original publication have not changed, but updated information has been included as a result of the release of the ASX waiver.
More information: Clarity publication Revised financial reporting deadlines for December 2020
Resources for December 2020 financial reporting
Action: Use our tools and resources to assist in meeting financial reporting requirements in this reporting season.
Set out below is a brief summary of key resources relevant for financial reporting at 31 December 2020:
Financial reporting guide and models
- Australian financial reporting guide (9th Edition)
- Tier 1 model financial statements
- Model half-year financial statements
- Model special purpose financial statements
- Revised financial reporting deadlines for December 2020
- Disaggregated revenue disclosures
- Regulatory focus areas – financial reporting in a COVID-19 environment
- A diagnosis for your impairment assessment
- Disclosure of climate-related risks
- Non-IFRS measures – enhancements or embellishments?
Other Deloitte publications
- IFRS in Focus – Closing out 2020
- IFRS in Focus – Accounting considerations related to the Coronavirus 2019 disease
- IFRS in Focus – COVID-19 and financial reporting under IFRS Standards
- IFRS in Focus – Expected credit loss accounting considerations related to Coronavirus disease 2019
Two minute update
Why now? Ensure you are aware of the latest developments and consider important developments that are relevant to your organisation.
A quick summary of recent developments:
- ATO guidance on CBC reporting entities and SGEs – The Australian Tax Office has published updated guidance on how ‘CBC reporting entities’ can meet their obligations for general purpose financial statements under the Tax Administration Act 1953. Additional guidance has also been provided on determining whether an entity is a CBC reporting entity and/or a significant global entity. More information can be found in our Clarity publication Tax legislation expands entities required to prepare general purpose financial statements
- Upcoming deadline on sale and leaseback proposals – The IASB and AASB are currently consulting on how an entity should account for sale and leaseback transactions, specifically involving variable lease payments. The proposals, together with an earlier IFRS Interpretations Committee agenda decision, would see all types of variable lease payments taken into account in determining both the gain or loss arising from the sale and leaseback transaction and the subsequent measurement of the lease liability. This is significantly different to the accounting for a normal lease. Comments on the proposals close to the AASB on 21 February 2021 and to the IASB on 29 March 2021. More information about the proposals can be found in our IFRS in Focus publication
- New Purpose–driven Business Reporting in Focus publication – This edition discusses the prototype climate-related financial disclosure standard published by the CDP, CDSB, GRI, IIRC, and SASB.