The paper that caused the stir was the AASB Research Centre of the AASB Research Report No.1 “Application of the Reporting Entity Concept and Lodgement of Special Purpose Financial Statements”. The purpose of which was to inform public debate about requirements to lodge financial statements and their quality. The Report analysed financial statements lodged by unlisted companies (including large proprietary companies and public companies limited by guarantee) with the ASIC; and financial statements lodged by a range of state-based entities (including incorporated associations) with regulators in Victoria, NSW and Queensland.
Very few preparers and auditors pay due attention to ASIC regulatory guide 85 “Reporting requirements for non-reporting entities” and to ASIC surveillance reports on large proprietary company reporting. Many also conveniently overlook that one of the special purpose standards (AASB 101) requirements for fair presentation and the accrual basis of accounting.
My answers:
- Preparers to take more accountability for financial reporting rather than using auditors as their compliance back stops
- ASIC to enforce the current law
- Presumption that if the entity lodges financial statements that are on the public reporting it is a reporting entity
- Raise the reporting threshold including restricting financial reporting to “public accountable entities”
- Name and shame companies and auditors, and
- Permit IFRS for SMEs in SPFS.
