Australian regulators said they were disappointed in corporates’ lack of preparedness for new accounting rules.
Reports in the Australian Financial Review said the Australian Securities and Investments Commission (ASIC) has reviewed 2017 statements of 90 corporates in the country to assess their compliance to new accounting rules that came into effect on Jan. 1 of this year.
“The number of companies that quantified the impact of coming new requirements for reporting revenue and financial instruments was disappointing,” said ASIC Commissioner John Price. “Directors and preparers should ensure that they understand the impact of new accounting standards and have systems and processes in place to support reporting under these new standards.”
The new rules, reports explained, fall under AASB 15 and AASB 9 regulations. The regulations require corporates to have “expert knowledge” of customer contracts, while there are additional rules related to revenue forecasting as well as revenue recognition. Reports said the ASIC made further inquiries into 17 of the 90 businesses it assessed.
The regulator found that most of the businesses that are likely to be significantly impacted by the rule changes “had not quantified the impact of these standards” in their financial statements, reports noted. Further, the ASIC said this may “indicate a lack of preparedness for reporting under the new standards.”
In its assessment, the ASIC also concluded that some audit reports were too vague.
The ASIC’s conclusions follow just weeks after the watchdog warned of funding cuts of up to 8 percent over the next four years, according to Reuters reports in May.
“These cuts are not large cuts, but they’re significant to the public’s mind and they’re significant for the morale and strength of resolve of the regulators concerned,” reflected University of Technology, Sydney Business School professor Thomas Clarke at the time.
The ASIC has been highlighting “limited resources” as a key hurdle to its ability to combat allegations of misconduct by financial service providers, currently under investigation by a Royal Commission.