Six more listed entities add additional material business risk disclosure because of ASIC surveillan
Six more listed entities add additional material business risk disclosure because of ASIC surveillan
The Australian Securities and Investments Commission (ASIC) continues to call out entities whose disclosure about material business risks is insufficient. Listed entities should therefore not under-estimate the importance of disclosing sufficient information about material business risks in their Operating and Financial Review (OFR). We encourage all listed entities to revisit these disclosures in the lead up to 30 June 2023 reporting deadlines. Please contact us if you require assistance in this regard.
As a result of its financial reporting surveillance of 30 June 2022 financial reports, ASIC named six more listed entities in its recent Media Release that were required to disclose additional information about material business risks in their 31 December 2022 half-year financial reports. This follows five entities required to provide additional business risk disclosures during October and November 2022, and another four in February 2023.
Why disclose material business risks?
Section 299A(1) of the Corporations Act 2001 requires listed entities to include a discussion in their directors’ report or OFR that contains information that members of the listed entity would reasonably require to make an informed assessment of:
- The operations of the entity reported on
- The financial position of the entity reported on
- The business strategies, and prospects for future financial years, of the entity reported on.
Although s299A(1) does not specifically refer to discussing business risks in the OFR, ASIC Regulatory Guide 247 Effective disclosure in an operating and financial review (RG 247) notes that it is important the discussion about future prospects is balanced. That is, it is likely to be misleading to discuss future prospects without also discussing material business risks that could adversely affect the entity achieving those prospects.
ASIC suggests preparers of the OFR review the additional disclosures being made in the OFR of other listed entities as they may assist them to improve their own disclosure.
More information
Our November 2022 Corporate Reporting Insights article provides more information about material business risks – what they are, and how they should be disclosed.
Need help?
Please contact BDO’s IFRS & Corporate Reporting team if you require assistance with your Corporate Reporting.