ASIC inquiries

ASIC has announced the results from its review of the financial reports of 85 listed entities for the year ended 31 December 2020. The review was conducted as part of ASIC’s ongoing risk-based reviews of financial reports.


ASIC’s inquiries

ASIC made inquiries of 15 entities on 22 matters. The largest number of matters relate to impairment of non-financial assets, asset values and disclosure in the operating and financial review.

ASIC found that many companies who have been adversely impacted by COVID-19 did not sufficiently account for this in the reporting of asset values and financial position.

The full list of matters comprising the inquiries is outlined below:

Matter Number of inquiries
Impairment and other asset values 10
Operating and Financial Review 3
Consolidation accounting 2
Lease accounting 2
Off-balance sheet arrangements 1
Revenue recognition 1
Provisions 1
Other matters 2
Total 22


Matter types inquired into

ASIC provides insight into the matter types it has enquired into, and examples of matters from the current review.


Impairment and other asset values

ASIC inquires into assessments of the recoverability of the carrying values of assets, including goodwill, mining assets, and property, plant and equipment. In a number of cases, it found that cash flows and assumptions were not reasonable or supportable (e.g. with regard to historical trading), and that entities had not adequately disclosed key assumptions and valuation techniques.


Operating and Financial Review (OFR)

ASIC looks at an entity’s OFR to determine whether it is consistent with the financial report and reflects the impact of the pandemic. In one instance, no information had been provided about business strategies and prospects and the impacts of COVID-19 on key assumptions.


Consolidation accounting

In one matter, ASIC made inquiries about the accounting for the loss of control of a subsidiary and treatment of the remaining interest as a joint arrangement.


Lease accounting

In one matter, ASIC inquired about an entity’s treatment of a sale and leaseback transaction that resulted in a material gain on sale.


Off-balance sheet arrangements

ASIC made an inquiry about the basis for an entity’s apparent derecognition of trade receivables under a debtor securitisation facility.


Revenue recognition

ASIC inquired into one entity in connection with its accounting policy for late fees.



ASIC made an inquiry with one entity about potential liabilities with respect to cyber breaches.


Other matters

ASIC also inquired with two entities on the adequacy of make good provisions in connection with leased properties, where the entities did not have regard to the obligations under their lease agreements.



ASIC’s review of 31 December 2020 financial reports is part of its ongoing risk-based review. The latest results indicate that directors and auditors need to focus on impairment of non-financial assets, particularly as businesses navigate through the continuing impacts of the COVID-19 pandemic.

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