ASIC to crackdown on reporting

TheAustralian Securities and Investments Commission(ASIC) will crack down on shoddy financial reporting to ensure accounting standards are met as a key focus in its 2004-2005 financial year surveillance program.

In its second year of the program, the regulator will review the financial reports of 440 entities, and will continue to review the financial report of each publicly listed entity at least once every four years.

“ASIC’s surveillance is designed to support the confident and informed participation of investors by providing greater certainty that companies are appropriately meeting their financial reporting requirements,” ASIC chief accountant Greg Pound says.

Of those 400 firms to be reviewed next financial year, more than 300 will be chosen at random as part of the four-year review cycle, while about 100 will be selected for review based of a range of risk factors.

“Financial reports should provide relevant and reliable financial information by being prepared in accordance with accounting standards, as is required by the Corporations Act. Our surveillance program is a key way of monitoring compliance with the accounting standards and promoting high quality reporting,” Pound says.

Furthermore, the peak regulator will review any entity receiving a qualified audit report due to the independent auditor’s belief the financial report is not in compliance with all accounting standards.

“A qualified audit report is a prima facie indication that the company has not met its obligations under the Act,” Pound says.

For the 30 June 2004 reporting period, ASIC will also review the financial reports of all publicly listed companies that transition to adopt international financial reporting standards.

“Directors and management need to direct attention and resources to managing the transition, and to educating and informing financial report users about the future implications for their company of this change in the reporting framework,” Pound says.