ASIC announces new reporting requirements for AFS licenses
ASIC has disclosed to which AFS licensees the new reporting regime applies.
ASIC has announced new financial reporting requirements for Australian financial services (AFS) licensees, following changes to the accounting standards.
AFS licensees’ financial reports now must contain disclosures consistent with the financial reports of other for-profit entities, prepared under standards set by the Australian Accounting Standards Board (AASB).
‘These reporting changes will assist those who prepare financial reports under both sets of requirements, and provide relevant information for ASIC’s surveillances of licensees and for other users of financial reports”, said ASIC Commissioner Sean Hughes.
New reporting regime applies to these licensees
From financial years commencing 1 July 2021, for-profit companies can no longer prepare special purpose financial reports (SPFRs) that do not contain all disclosures required in the full accounting standards.
Accounting standards instead allow entities that do not have public accountability to use a simplified disclosure regime. Entities that have public accountability must comply with the disclosure requirements of the full standards. All entities must apply the full recognition and measurement requirements for assets, liabilities, income and expenses.
ASIC announced the AASB’s new reporting regime will apply for the Chapter 7 financial reports of most AFS licensees, using the public accountability test, including:
regulated by the Australian Prudential Regulatory Authority;
participants in a licensed market;
participants in a clearing and settlement facility;
retail over-the-counter derivative issuers;
wholesale electricity dealers;
corporate advisors that deal in financial products;
over-the-counter derivative traders;
responsible entities of a registered scheme;
corporate directors of a corporate collective investment vehicle;
providers of a custodial or depository service;
operators of an investor directed portfolio service.
All licensees will be required to prepare a cash flow statement. In addition to single entity financial statements, consolidated financial statements must be presented where the licensee has controlled entities.
The new disclosure requirements apply from financial years commencing on or after 1 July 2021, but many licensees can choose to defer any new disclosure requirements by one year, the financial watchdog informed, adding that AFS licensees that prepared SPFRs last year, and that do not prepare reports under Chapter 2M, can choose to defer the new disclosure requirements to financial years commencing on or after 1 July 2022.
The changes will be given legal effect through the certification section of the prescribed ASIC Form FS 70 Australian financial services licensee profit and loss statement and balance sheet.
ASIC will make the revised form available in late June 2022.