Question

1. Identify the financial reporting requirements set down by ASIC for companies.
2. What does AASB standard 101 govern? Discuss
3. As per s286 of the Corporations Act what are the financial records and Books that have to be kept by companies? List them.
4. Which internal control procedures must be kept in place to ensure that financial records and information is accurate and reliable and to ensure compliance with financial and operational requirements?
5. What are the “Disclosure requirements” in relation to listing with ASX? List them

Answer 1

1)The Australian Securities and Investments Commission’s (ASIC's) role is to enforce and regulate company and financial services laws to protect Australian consumers, investors and creditors. Although all companies should keep financial records to ensure they understand how their operations are faring, some types of companies need to keep these records for the purposes of preparing and lodging financial reports with us.

Generally, companies must lodge reports where:

• there are substantial sums of money involved
• the general public has invested funds with the company, or
• the company exists for charitable purposes only and is not intended to make a profit. See charities registered with the ACNC if your company is a charity registered with the Australian Charities and Not-for-Profits Commission

2) AASB 101 Standard prescribes the basis for presentation of general purpose financial statements to ensure comparability both with the entity’s financial statements of previous periods and with the financial statements of other entities. It sets out overall requirements for the presentation of financial statements, guidelines for their structure and minimum requirements for their content.

3) All companies must keep some form of written financial records that:

• record and explain their financial position and performance,
• enable accurate financial statements to be prepared and audited, and
• Financial records can include: Invoices, receipts,checks,books of prime entry,working papers and other financial documents.

4) internal control procedures must be kept in place to ensure that financial records and information is accurate and reliable and to ensure compliance with financial and operational requirements are as follows.

1. Segregation of Duties

2. Physical Audits of Assets

3. Standardized Financial Documentation

4. Periodic Reconciliations in Accounting Systems

5. Approval Authority Requirements

5) ASX Listing Rule 3.1 states that information such as the following could be market sensitive and therefore would require disclosure if material:

1. A transaction that will lead to a significant change in the nature or scale of the entity’s activities;
2. A material acquisition or disposal;
3. The granting or withdrawal of a material licence;
4. The entry into, variation or termination of a material agreement;
5. A change in the entity's financial forecast or expectation, or the fact that the entity’s earnings will be markedly different from market expectations;
6. A change in the control of the responsible entity of a trust;
7. A proposed change in the general character or nature of a trust;
8. An agreement between the entity (or a related party or subsidiary) and a director (or a related party of the director);
9. A change in accounting policy adopted by the entity;
10. Becoming a plaintiff or defendant in a material law suit;
11. The commission of an event of default under, or other event entitling a financier to terminate, a material financing facility;
12. The appointment of a receiver, manager, liquidator or administrator in respect of any loan, trade credit, trade debt, borrowing or securities held by it or any of its child entities;
13. A transaction for which the consideration payable or receivable is a significant proportion of the written down value of the entity's consolidated assets – normally an amount of 5 per cent or more would be significant but a smaller amount may be significant in a particular case;
14. A recommendation or declaration of a dividend or distribution;
15. A recommendation or decision that a dividend or distribution will not be declared;
16. Under subscriptions or over subscriptions to an issue;
17. A copy of a document containing market sensitive information that the entity lodges with an overseas stock exchange or other regulator which is available to the public;
18. . Giving or receiving a notice of intention to make a takeover;
19. Any rating applied by a rating agency to an entity, or securities of an entity, and any change to such a rating;
20. . A proposal to change the entity's auditor