ASIC's financial reporting surveillance program

The Australian Securities and Investments Commission (ASIC) plays a crucial role in maintaining the integrity and transparency of the financial markets. One of its key initiatives in this regard is the financial reporting surveillance program, designed to scrutinise the annual and interim financial reports of selected listed companies and significant entities. This program aims to ensure compliance with the Corporations Act and Australian Accounting Standards, ultimately contributing to the improvement of financial reporting quality.


Selection of accounts for review

The first step in ASIC’s financial reporting surveillance program involves the meticulous selection of accounts for review. This process is guided by a set of criteria that reflect current market trends, “hot topics,” and emerging accounting and disclosure issues. Some companies may be included based on other ASIC activities or public complaints. Importantly, companies undergoing review are generally not made aware of it unless specific issues warrant clarification.


Desktop review

Once accounts are selected, ASIC officers conduct a thorough desktop review to evaluate compliance with the Corporations Act and accounting standards. This step involves assessing potential areas of non-compliance and determining their materiality. The desktop review serves as a comprehensive examination to identify any discrepancies or irregularities in financial reporting.


Contact with companies

If concerns arise during the desktop review, ASIC initiates contact with the respective company to seek further information. The company is made aware of ASIC’s concerns, and an invitation is extended for a response to clarify the disclosed information and accounting treatments used. This communication is a crucial part of the process, allowing companies the opportunity to address any issues raised by ASIC.


Remedial action or no further action

Based on the response from the company, ASIC determines whether further discussion is needed or if the concerns have been adequately addressed. If ASIC is satisfied with the company’s response, no further action is taken. However, if concerns persist, ASIC may take various remedial actions, ranging from reissuing financial statements to more stringent measures aimed at rectifying non-compliance.


Issuing a media release

At the conclusion of each reporting season, ASIC publishes the findings of its financial reporting surveillance program. This involves summarizing the results and highlighting key areas of compliance or non-compliance. The purpose of this media release is to keep preparers of financial reports informed about current topics requiring attention and to showcase the overall level of compliance, ultimately contributing to the ongoing enhancement of financial reporting quality.


Key takeaways

ASIC’s financial reporting surveillance program stands as a testament to the regulatory body’s commitment to maintaining the integrity of financial reporting in Australia. By proactively identifying and addressing potential issues, ASIC plays a pivotal role in fostering transparency and accountability within the financial markets. The program not only holds companies accountable for their reporting practices but also serves as a valuable resource for industry participants, contributing to the continuous improvement of financial reporting standards.

Nyman Gibson Miralis provides expert advice and representation in cases of alleged corporate non-compliance.

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