The Australian Securities and Investments Commission (ASIC) announced this Monday a series of major changes to reporting requirements by introducing new accounting standards for listed entities and other companies of public interest.
These new criteria will change the way many firms report assets, liabilities, and profits, marking the biggest change to reporting requirements since the adoption of International Financial Reporting Standards (IFRS) in 2005.
In the statement, ASIC informs that both full-year and half-year reports on December 31, 2018, must comply with these new accounting standards. For the half-year reports, there are also new disclosure requirements as companies must disclose the nature and effect of changes in accounting policies from applying the new standards.
In addition, there are also new standards regarding accounting by insurers; and the definition and recognition criteria for assets, liabilities, income, and expenses.
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According to the statement, the new accounting standards may significantly change: “how and when revenue can be recognised, the values of financial instruments (including loan provisioning and hedge accounting), reported assets and liabilities relating to leases, accounting by insurance companies, and the general identification and recognition of assets, liabilities, income and expenses.”
Commenting on the new standards, ASIC Commissioner John Price said: “we are concerned that some companies may not have adequately prepared for the impact of new accounting standards that can significantly affect results reported to the market by companies, require changes to systems and processes, and affect businesses. We will monitor these areas closely and will take action where required.”
Accounting Standards to Have Real Business Impacts
ASIC urges firms to assess the impact that these new accounting standards will have on their reporting, with the regulator warning the new standards can have real business impacts.