ASIC outlines focus areas for regulated entities
ASIC outlines focus areas for regulated entities | Insurance Business Australia
Insurance News
ASIC outlines focus areas for regulated entities
Corporate watchdog identified risks that could impact entities’ performance
Insurance News
By
Roxanne Libatique
The Australian Securities & Investments Commission (ASIC) has outlined the areas that directors, preparers of financial reports, and auditors to focus on when submitting reports for the half and full years ending June 30, 2023.
The areas of attention for half and full years ending June 30, 2023, are:
asset values;
provisions;
solvency and ongoing concern assessments;
events occurring after year end and before completing the financial report;
disclosures in the financial report and Operating and Financial Review (OFR); and
the impact of a new accounting standard for insurers.
“Directors should ensure that investors are properly informed on the impact of changing and uncertain economic and market conditions, ‘net zero’ targets, and other developments on financial position and future performance. Impacts on asset values and provisions should be assessed, and uncertainties, key assumptions, business strategies, and risks disclosed,” said ASIC Commissioner Danielle Press.
What to assess
ASIC advised directors and management to assess how the current and future performance of the company, the value of its assets and provisions, and business strategies might become impacted by the changing circumstances, uncertainties, and risks, such as:
the availability of skilled staff and expertise, which can impact revenue and costs;
the impact of rising interest rates on future cash flows and on discount rates used in valuing assets and liabilities;
inflationary impacts that may differ between costs and income;
increases in energy and oil prices;
geopolitical risks, including the Ukraine/Russia conflict;
impacts of climate change, climate-related events, and transitioning to net zero;
technological changes and innovation;
COVID-19 conditions and restrictions during the reporting period;
changes in customer preferences and online purchasing trends;
the discontinuation of financial and other support from governments, lenders, and lessors;
legislative and regulatory changes; and
other economic and market developments.
“Assumptions underlying estimates and assessments for financial reporting purposes should be reasonable and supportable,” Press said.
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