ASIC focus areas for 31 December 2020 financial statements

In addition to the Ten things to remember when preparing 31 December annual and half-year financial statements, finance teams, boards and auditors should take note of ASIC’s recent Media Release MR20-325 which outlines the following five key focus areas for its financial reporting surveillance of 31 December 2020 financial statements:

  • Asset values
  • Provisions
  • Solvency and going concern assessments
  • Subsequent events, and
  • Disclosures in the financial report and Operating and Financial Review (OFR).

MR20-325 also highlights other areas such as hedge effectiveness, sales returns and off-balance sheet exposures.

Asset values

Preparers, directors and auditors should focus on:

  • Impairment of non-financial assets
  • Values of property assets
  • Expected credit losses on loans and receivables
  • Values of other assets such as inventories because of reduced demand and old stocks, the probability that deferred tax assets will be realised, and the impact of COVID-19 on investments in unlisted entities.


There is a need to consider whether provisions should be recognised for onerous contracts, financial guarantees given, and restructuring of businesses.

Subsequent events

Subsequent events should be reviewed to assess whether they are ‘adjusting’ or ‘non-adjusting’ events.

Disclosures in the financial report and OFR

Directors and preparers should put themselves in the shoes of investors to consider what information investors would want to know.

Financial report disclosures

With regard to the financial report, disclosure about uncertainties, key assumptions and sensitivities is important, and should include information on probability-weighted scenarios that support judgements on asset values and other assessments. Disclosures should also include an explanation as to how uncertainties have narrowed since the previous annual or half-year financial report. Lastly, attention should be given to assets and liabilities being appropriately classified as current or non-current.


In the OFR, ASIC will be looking at whether the discussion ‘tells the story’ of how the business has been impacted by COVID-19, and also how significant factors not attributed to COVID-19 are included and given prominence (i.e. can’t say poor performance is only because of COVID-19 when other factors are the cause).

Government and other types of support

Information about each type of material government support (e.g. JobKeeper, land tax relief, loan deferrals, etc.) and other support (e.g. rent concessions) should be clearly disclosed in the financial report and the OFR. This should include the amount, commencement date and expected duration of the assistance.

Non-IFRS information

With respect to non-IFRS information:

  • Non-IFRS profit measures in the OFR or market announcements should not be misleading
  • The dollar impact on EBITDA of adopting the new leases standard should be disclosed because operating lease expense under the previous accounting standard would have been included in EBITDA in prior years
  • Where net tangible assets (NTA) is presented by a lessee, a prominent footnote on the same page should explain whether right-of-use leased assets have been included in NTA.

Half-year reports

Half-year reports at 31 December 2020 may need to include a lot of disclosure about developments and the continuing impact of COVID-19 and other factors since 30 June 2020.

More information

Please refer to MR20-325 for more information.

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