ASIC releases urgent reporting update in response to Victorian COVID-19 restrictions

Wednesday, 12 August 2020

The Australian Securities and Investments Commission (ASIC) has updated their FAQS on the implications of COVID-19 for financial reporting and audit to provide guidance on the impact of restrictions in Victoria and changes to JobKeeper on financial reports for periods ended 30 June 2020.


The Australian Securities and Investments Commission (ASIC) has updated their FAQS on the implications of COVID-19 for financial reporting and audit to provide guidance on the impact of restrictions in Victoria and changes to JobKeeper on financial reports for periods ended 30 June 2020.

The guidance discuss how entities should report and disclose on both the Stage 3 and Stage 4 lockdowns in Victoria as well as the changes to JobKeeper in both July and August. For entities balancing 30 June these are all events after the balance date, however ASIC indicate they may affect assessments of asset values (such as assessments of impairment of non-financial assets, expected credit losses on loans and receivables, and fair values of investment assets), solvency and going concern.

Where an entity is significantly affected by any of these factors, ASIC indicate that these events should be used in preparing discounted cash flows. This includes that any probability weighted scenario as at 30 June should have had some expectation of lockdowns in Melbourne and extension of JobKeeper, although not necessarily Victorian wide lockdowns and Stage 4 lockdowns in Melbourne.

ASIC also indicates that the effect of Victorian events on assets values may be key assumptions to be disclosed in the notes to the financial report. Where an entity is not fully reflecting the Victorian lockdown and extension of JobKeeper in their 30 June financial report, then the estimate of the financial effect may need to be disclosed in the subsequent events note.

ASIC’s FAQ represents quite clear guidance on how entities may wish to account for these events and represents the surest indication yet of how the regulator, at least, believes probability weighted scenarios on potential COVID-19 events should be incorporated into discounted cash flow forecasts. Directors should engage with management regarding this latest guidance and what effect the entity believes the Victorian lockdowns and extension of JobKeeper have had on assets values as well as whether they will be disclosed in the subsequent events note.

Directors dealing with disclosure and reporting issues around COVID-19 should consult the free guide published by the AICD together with Chartered Accountants Australia & New Zealand and CPA Australia: Impacts of COVID-19 on annual report disclosures: A guide for directors, preparers and auditors.

AICD members are also able to access a webinar recording on the topic, held on 23 July when an expert panel discussed how to approach reporting and disclosure this reporting season.

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