In August 2019, the Australian Securities and Investments Commission (ASIC) released 19-206MR ‘Findings from 31 December 2018 financial reports’, highlighting the results from its review of 125 entities, of which 85 were reviews of full year financial reports with 40 being half year financial reports.

The table below summarises the key findings from the review:

Areas of focus	Findings from the 31 December 2018 financial reports
Asset values and impairment testing	Concerns regarding assessments of the recoverability of the carrying values of assets, including goodwill, exploration and evaluation expenditure, and property, plant and equipment. Specific findings included: (a) reasonableness of cash flows and assumptions – where cash flows and assumptions used in the determination of recoverable amounts were not reasonable or supportable having regard to historical cash flows, economic and market conditions and funding costs (b) determining the carrying amount of cash generating units (CGUs) – such as inappropriate use of cash flows from one asset or part of the business to support the carrying values of other assets; incomplete capture of all assets that generate cash flows in the carrying amount of a CGU; and incorrectly deducting liabilities from the carrying amount of the CGU (c) use of fair value – inappropriate use of the discounted cash flow technique to estimate fair value where the calculations are dependent on a large number of inputs. (d) impairment indicators – insufficient regard to impairment indicators such as significant adverse changes in market conditions and reported net assets exceeding market capitalisation (e) disclosures – insufficient disclosures regarding the sensitivity analysis; key assumptions such as growth and discount rates; and valuation techniques and inputs used for fair value assumptions
Revenue recognition	Concerns with the recognition of revenue included: (a) contracts that involve multiple performance obligations where one or more obligations were still to be met (b) revenue not appropriately disaggregated with regard to how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.
Tax accounting	Concerns around the adequacy of tax expense and whether it is probable that future taxable income will be sufficient to enable the recovery of deferred tax assets relating to tax losses.
Consolidation accounting	Concerns relating to the non-consolidation of entities, including where an entity holds a significant interest in an investee.
New accounting standards	Concerns around the extent of disclosure for the impact of adopting new accounting standards on revenue recognition and financial instruments.
Non-IFRS financial information	Concerns over the disclosure of non-IFRS financial information which may have the potential to be misleading because of: (a) its prominence compared to the equivalent statutory measure (b) the lack of clarity on how it was determined.
Operating and financial review	Concerns over the level of analysis of the underlying drivers of results and explanation of the impact of relevant business risks on future strategies and prospects.
Estimates and accounting policy judgements	Concerns over the quality and completeness of disclosures in relation to estimates, such as key assumptions, reasons for judgements, alternative treatments, and appropriate quantification.

Inquiry into the regulation of auditing in Australia

At the same time as ASIC released its inspection results, the Parliamentary Joint Committee on Corporations and Financial Services (the Committee) was referred by the Australian Senate to initiate an inquiry into the regulation of auditing in Australia. The Committee has been asked to present a report on its findings by 1 March 2020.

All details, including the Terms of Reference, relating to the inquiry can be found on the Parliament of Australia website.

Removal of Special Purpose Financial Statements for Certain For-Profit Private Sector Entities – AASB Exposure Draft ED 297

In August 2019, the Australian Accounting Standards Board (AASB) released exposure draft ED 297 'Removal of Special Purpose Financial Statements for Certain For-Profit Private Sector Entities’ (the ED). The proposals in the ED have been made in conjunction with ED 295 'General Purpose Financial Statements - Simplified Disclosures for For-Profit and Not-for-Profit Tier 2 Entities', with the objective of promoting comparability, transparency and enforceability of financial reporting.

The proposals are to:

remove the ability of certain for-profit private sector entities (such as large proprietary, unlisted public and small foreign-controlled companies) to self-assess their financial reporting requirements and prepare Special Purpose Financial Statements (SPFS) by providing Tier 2 General Purpose Financial Statements (GPFS) reporting requirements for these entities
complement the recent increase in thresholds for determining large proprietary companies, effective 1 July 2019
require that for-profit private sector entities that are publicly lodging financial statements comply with all the recognition and measurement (R&M) requirements in Australian Accounting Standards (AAS)
remove the inconsistency of the term ‘reporting entity’ between SAC 1 and some AAS and the IASB’s revised ‘Conceptual Framework for Financial Reporting’
advance the principle that legislation should avoid ‘exceptions’ such as the self-assessment of financial reporting requirements
reduce the reporting burden of for-profit and not-for-profit entities using the current Tier 2 GPFS framework for preparing GPFS
more closely align the IFRS for Small Medium Enterprises (SMEs) Standard disclosures in the proposed Tier 2 reporting requirements.

This means that:

there would be a new Tier 2 GPFS framework which requires compliance with all R&M requirements in AAS. An entity may voluntarily elect to prepare Tier 1 GPFS consisting of full recognition, measurement and disclosure
all for-profit private sector entities lodging financial statements with ASIC will prepare some form of GPF
all for-profit private sector entities required by legislation to prepare financial statements in accordance with AAS will prepare some form of GPFS
all for-profit private sector entities that are trusts, partnerships, joint arrangements or self-managed superannuation funds, as well as entities subject to other requirements that have constituting documents created or amended after 1 July 2020 that specifically require financial statements to be prepared in accordance with AAS, will prepare some form of GPFS.

The ED is open for comment until 15 November 2019.

A new internal audit and risk management framework for local councils in NSW – discussion paper

Changes to the Local Government Act 1993 in 2016 made it a requirement for councils and joint organisations to constitute an audit, risk and improvement committee (ARIC). This requirement will take effect from March 2021 at the earliest.

In consultation with key stakeholders, the Office of Local Government (OLG) has developed a draft internal audit and risk management framework to support and inform the operations of ARICs, as outlined in:

the discussion paper ‘A New Risk Management and Internal Audit Framework for Local Councils in NSW’
a ‘Snapshot Guide’ – high level summary of proposed changes.

OLG is seeking feedback on the proposed framework from councils, members of the public and risk management and internal audit practitioners. The deadline for all written submissions is 31 December 2019.

Audit Office of New South Wales

Margaret Crawford, Auditor-General for New South Wales – presentations, attendances and interviews

Organisation	Event	Involvement	Date
EY	Annual Women’s Executive Luncheon	Attendance	13 September 2019
Melbourne University	Graduate School presentation	Presentation to Graduate School	30 August 2019
Institute of Public Administration Australia (IPAA)	Public Sector Governance Forum	Attendance	29 August 2019
Pacific Association of Supreme Audit Institutions (PASAI)	PASAI Congress 2019	Attendance	11-16 August 2019
IPAA	On the Couch with Rodd Staples	Attendance	6 August 2019
Parliament of New South Wales	Parliamentary Briefing	Briefing to address new members of Parliament on role of the Auditor-General	6 August 2019
Parliament – Legislative Council	Public Accountability Committee – first meeting of new committee	Discussion regarding role of the Auditor-General	5 August 2019
Parliament – Legislative Assembly	Public Accounts Committee – first meeting of new committee	Discussion regarding role of the Auditor-General and the committee	1 August 2019
CPA Australia	Public Sector Leader Series Lunch	Presentation	31 July 2019
Public Service Commission	NAIDOC week executive breakfast	Attendance	11 July 2019
Committee for Economic Development of Australia	Delivering on government priorities – Tim Reardon	Attendance	5 July 2019
Department of Premier and Cabinet	Premier's Address to the Government Sector	Attendance	3 July 2019

Auditor-General’s reports to Parliament

Report	Type of report	Report date
Ensuring teaching quality in NSW public schools	Performance audit	26 September 2019
Mental health service planning for Aboriginal people in New South Wales	Performance audit	29 August 2019
2019-20 Annual Work Program	Work program	2 August 2019

Accounting Update

Australian update – Australian Accounting Standards Board (AASB)

Topics discussed included:

AASB Meeting Highlights – 17-18 September 2019

AASB 1054 – disclosure of compliance with R&M in SPFS
AASB 1059 ‘Service Concession Arrangements: Grantors’ - Implementation
Right-of-use assets of not-for-profit entities under concessionary leases
ED 297 and 295 – feedback on the comment period
AASB 15 Research Grant Examples
Amendments to IFRS 17 ‘Insurance Contracts’.

Latest news, accounting standards and work-in-progress documents from the AASB included:

Name	Type of document	Publication date
Exposure Draft – ED 297 ‘Removal of Special Purpose Financial Statements for Certain For-Profit Private Sector Entities’ – August 2019 – open for comment until 15 November 2019*	Exposure draft	15 August 2019
Research Report 12 Financial Reporting Practices of For-Profit Entities Lodging Special Purpose Financial Statements	Research report	15 August 2019
Research Report 11 Review of Special Purpose Financial Statements: Large and Medium-Sized Australian Charities	Research report	15 August 2019
Exposure Draft – ED 296 ‘Disclosure of Accounting Policies’ – August 2019 – open for comment until 28 October 2019	Exposure draft	2 August 2019
Exposure Draft – ED 295 ‘General Purpose Financial Statements – Simplified Disclosures for For-Profit and Not-for-Profit Tier 2 Entities’ – August 2019 – open for comment until 15 November 2019	Exposure draft	1 August 2019
Exposure Draft – ED 294 ‘Deferred Tax related to Assets and Liabilities arising from a Single Transaction’ – July 2019 – open for comment until 18 October 2019	Exposure draft	25 July 2019
Exposure Draft – ED 293 ‘Amendments to Australian Accounting Standards – Disclosure in Special Purpose Financial Statements of Compliance with Recognition and Measurement Requirements’ – July 2019 – comments closed 19 August 2019	Exposure draft	4 July 2019
Exposure Draft – ED 292 ‘Amendments to AASB 17’ – July 2019 – comments closed 30 August 2019	Exposure draft	2 July 2019

*For more information refer to Hot Topics section.

International Update – International Accounting Standards Board (IASB)

Topics discussed included:

IASB Meeting Highlights – 24-26 September 2019

Implementation matters: Onerous Contracts
Classification of liabilities as current or non-current (amendments to IAS 1)
Business combinations under common control
Financial instruments with characteristics of equity
Rate-regulated activities
Disclosure initiative
Primary financial statements
IBOR reform and the effects on financial reporting
SME standard review and update
Subsidiaries that are SMEs
Post implementation review of IFRS 10-12.

IASB Meeting Highlights – 28 August 2019

IBOR reform and the effects on financial reporting.

IASB Meeting Highlights – 22-25 July 2019

SME Standard review and update
Implementation matters: IFRIC update
Classification of liabilities as current or non-current (amendments to IAS 1)
Goodwill and impairment
Business combinations under common control
Financial statements with characteristics of equity
Rate-regulated activities
Disclosure initiative
Primary financial statements
IBOR reform and the effects on financial reporting
Dynamic risk management.

International Update – International Financial Reporting Standards (IFRS) Foundation

Latest news from the IFRS Foundation included:

Name	Publication date
Forthcoming publication: IASB to issue Interest Rate Benchmark Reform, which amends IFRS 9, IAS 39 and IFRS 7	24 September 2019
Better information about business combinations – goodwill and impairment	10 September 2019
Investor Perspectives: Proposed amendments to IFRS 17 – making it easier for insurers to explain their results	4 September 2019
IASB proposes amendments to IFRS Standards to improve accounting policy disclosures	1 August 2019
IASB proposes amendments to accounting for deferred tax	17 July 2019
Speech: Relevance of financial reporting in today’s global environment	5 July 2019

International Update – International Public Sector Accounting Standards Board (IPSASB)

Topics discussed included:

IPSASB Meeting Highlights – 24-27 September 2019

Collective and individual services & emergency relief
Infrastructure assets
Revenue with performance obligations (ED 70)
Revenue without performance obligations (ED 71)
Transfer expenses (ED 72)
Leases
Heritage.

Recent news and publications from the IPSASB included:

Name	Publication date
Exposure Draft 69 – ‘Public Sector Financial Instruments: Amendments to IPSAS 41, Financial Instruments’ – open for comment until 31 December 2019	27 August 2019
Exposure Draft 68 – ‘Improvements to IPSAS, 2019’ – open for comment until 14 October 2019	5 August 2019

Auditing Update

Australian Update – Auditing and Assurance Standards Board (AUASB)

Topics discussed included:

AUASB Meeting Highlights – 10-11 September 2019

Parliamentary inquiry into the regulation of auditing in Australia
Review of September 2019 IAASB papers (ISA 315, ISA 600, ISQM 1 and 2 and ASA 220)
AUASB technical matters (ASRE 2410)
GS 005 ‘Using the Work of a Management's Expert’.

Name	Publication date
Will a broader use of auditing standards increase trust?	15 August 2019
Auditing and Assurance Standards Board welcomes parliamentary inquiry into the regulation of auditing in Australia	2 August 2019

International Update – International Auditing and Assurance Standards Board (IAASB)

Topics discussed included:

IAASB Meeting Highlights – 16-20 September 2019

ISA 315 (Revised)
Quality Management at Firm Level
Extended External Reporting (EER) Assurance
Engagement Quality Reviews
Quality Management at Engagement Level (ISA 220)
Group Audits (ISA 600)
Work Plan for 2020 - 2021
Technology
Audit Evidence.

IAASB Meeting Highlights – 27 August 2019

Agreed-Upon Procedures.

IAASB Meeting Highlights – 1 August 2019

ISA 315 (Revised).

Latest publications from the IAASB included:

Name	Publication date
Foundation for the Future	13 September 2019
Audits of Less Complex Entities Webinars	23 July 2019
Introduction to Extended External Reporting (EER) Assurance Consultation Paper	9 July 2019

Ethics Update

Australian Update – Accounting Professional and Ethical Standards Board (APESB)

Topics discussed included:

APESB Meeting Highlights – 16 August 2019

Proposed revisions to APESB pronouncements
Project update on APES GN 30 ‘Outsourced Services’
Proposed revisions to APESB guidance notes
International and other activities
Proposed revisions to APESB pronouncements (ED 02/19)
Proposed revisions to long association technical staff Q&As
Project update of APES 230 ‘Financial Planning Services’.

Latest news and technical updates from the APESB included:

Name	Publication date
APESB issues revised APES 325 ‘Risk Management for Firms’ – effective 1 January 2020	6 September 2019
APESB issues revised APES 320 ‘Quality Control for Firms’ – effective 1 January 2020	6 September 2019
APESB issues revised APES 330 ‘Insolvency Services’ – effective 1 January 2020	30 August 2019
APESB issues exposure draft 03/19 which proposes revisions to APES 205, APES 315 and APES GN 30	23 August 2019
APESB issues revised APES 305 ‘Terms of Engagement’ – effective 1 January 2020	15 August 2019
APESB issues revised APES 225 ‘Valuation Services’ – effective 1 January 2020	31 July 2019
APESB issues revised APES 220 ‘Taxation Services’ – effective 1 January 2020	31 July 2019
APESB issues revised APES 215 ‘Forensic Accounting Services’ – effective 1 January 2020	31 July 2019
APESB issues revised APES 210 ‘Conformity with Auditing and Assurance Standards’ – effective 1 January 2020	31 July 2019

International Update – International Ethics Standards Board for Accountants (IESBA)

Topics discussed included:

IESBA Meeting Highlights – 16-19 September 2019

Non-assurance services
Fees project proposal
Tax planning and related services
Alignment of Part 4B with ISAE 3000 (revised)
Technology
IAASB-IESBA coordination
eCode
Joint IAASB and IESBA board meeting.

Latest publications from the IESBA included:

Name	Publication date
Exposure Draft ‘Proposed Revisions to the Code to Promote the Role and Mindset Expected of Professional Accountants’ – open for comment until 31 October 2019	31 July 2019

NSW Treasury

NSW Treasury documents and resources

Treasury’s recent releases included:

Name	Publication date
Changes to annual reporting requirements	30 September 2019
TPP 19-06 AASB 1059 Service Concession Arrangements: Grantors – Scoping	24 September 2019
GSF Act – Summary of the functions and obligations of ministers under the GSF Act	2 July 2019
TC 19-09 Notional Salary 2019-20	28 June 2019
TC 19-08 Domestic and Family Violence Workplace Support Policy – Guiding Principles for Agencies	28 June 2019

Department of Premier and Cabinet (DPC)

Ministerial Memoranda and Department Circulars

DPC's recent memos and circulars included:

Name	Type of document	Publication date
C2019-05-Crown Employees Wages Staff (Rates of Pay) Award 2019	Circular	20 August 2019
C2019-04-Crown Employees (Public Sector – Salaries 2019) Award	Circular	25 July 2019
C2019-03-Meal, Travelling and Other Allowances for 2019-20	Circular	23 July 2019
M2019-02-NSW Lobbyists Code of Conduct	Premier's Memorandum	1 July 2019

Public Service Commission (PSC)

Circulars and Memoranda

PSC released the following circulars and memos:

Name	Type of document	Publication date
PSCC-2019-02-Increase in Executive Remuneration – Determinations of the Statutory and Other Offices Remuneration Tribunal	Circular	30 August 2019

NSW Procurement Board

Directions and Procurement Alerts

NSW Procurement Board’s recent Directions and Procurement alerts included:

Name	Type of document	Publication date
PBD-2019-05-Enforceable Procurement Provisions	Direction	16 September 2019
New Public Works and Procurement Regulation 2019 in effect now	Alert	2 September 2019
Revised NSW Government Procurement Policy Framework commences 1 July 2019	Alert	2 July 2019
PBD-2019-04-Approved procurement arrangements	Direction	1 July 2019

Public Accounts Committee (PAC)

Inquiries and Reports

Inquiries referred and Reports tabled in NSW Parliament included:

Name	Type of document	Publication date
Examination of Auditor-General's performance audit reports May 2017 – December 2017	Inquiry	1 August 2019
History of the Public Accounts Committee (1902-2018)	Report	1 August 2019

Public Accountability Committee

Inquiries and Reports

Inquiries referred in NSW Parliament included:

Name	Type of document	Publication date
Regulation of building standards, building quality and building disputes	Inquiry	4 July 2019

Office of Local Government (OLG)

Recent publications released included:

Name	Publication date
19-24 Ward boundary and name changes	30 September 2019
19-23 Constitutional referendums and council polls	30 September 2019
19-22 Government response to IPART’s review of local government election costs	30 September 2019
19-21 Release of IPC Guideline 1 Returns of Interests	26 September 2019
19-20 A new internal audit and risk management framework for local councils in NSW – release of discussion paper*	10 September 2019
19-19 Resources to support implementation of the new Model Code of Conduct for Local Councils in NSW	26 August 2019
19-18 Calendar of Compliance and Reporting Requirements 2019-20	19 August 2019
19-17 The appointment and dismissal of senior staff	14 August 2019
One year reprieve for council emergency services levy	13 August 2019
19-16 New Property Acquisition Standards to apply immediately to all acquiring authorities in New South Wales, including all general purpose and county councils	6 August 2019
19-15 End of Year Financial Reporting 2018-19	15 July 2019
19-14 Recent amendments to the Local Government Act 1993	10 July 2019
19-13 The development of template social media and councillor/staff interaction policies – initial consultation	2 July 2019

*For more information refer to Hot Topics section.

Australian Securities and Investments Commission (ASIC)

Recent speeches and media releases included:

Name	Publication date
Making a real difference for real Australians – speech	13 September 2019
19-249MR ASIC update on Royal Commission implementation	11 September 2019
19-229MR ASIC’s Corporate Plan 2019-2023	28 August 2019
19-208MR ASIC updates guidance on climate change related disclosure	12 August 2019
19-206MR Findings from 31 December 2018 financial reports*	8 August 2019
Doing the right thing – speech	30 July 2019
19-164MR New regime for corporate whistleblower protections commences today	1 July 2019

*For more information refer to Hot Topics section

Australian Charities and Not-for-profits Commission (ACNC)

Australasian Council of Auditors-General (ACAG) Submissions to AUASB or AASB

ACAG recently made submissions on:

Name	Date
Exposure Draft 291— Not-for-Profit (NFP) Entity Definition and Guidance	9 September 2019
FAQ – Research grants	28 August 2019
Fatal Flaw Review – AASB 2019-X: Amendments to Australian Accounting Standards – Implementation of AASB 1059	14 August 2019

Publications by Australian and New Zealand Audit Offices

Australian National Audit Office

Australian National Audit Office (ANAO)	Publication date
Design and Governance of the Child Care Package	30 September 2019
National Ice Action Strategy Rollout	23 September 2019
Management of the Tourist Refund Scheme	9 September 2019
Government Advertising: June 2015 to April 2019	26 August 2019
ANAO Annual Report 2018-19	14 August 2019
Implementation of ANAO and Parliamentary Committee Recommendations	5 August 2019
Australian Research Council’s Administration of the National Competitive Grants Program	1 August 2019
OneSKY: Contractual Arrangements	31 July 2019
Defence’s Quarterly Performance Report on Acquisition and Sustainment	23 July 2019
Defence’s Administration of Travel Allowances Paid to APS Employees	22 July 2019
Cyber Resilience of Government Business Enterprises and Corporate Commonwealth Entities	4 July 2019
Quality assurance framework and plan	2 July 2019
ANAO Corporate Plan 2019-20	1 July 2019

Northern Territory Auditor-General's Office

Northern Territory Auditor-General's Office (NT AGO)	Publication date
August 2019 Report to the Legislative Assembly	15 August 2019

Queensland Audit Office

Queensland Audit Office (QAO)	Publication date
Managing the sustainability of local government services	25 September 2019
Investing in vocational education and training	8 August 2019

South Australian Auditor-General’s Department

South Australian Auditor-General’s Department (SA AGD)	Publication date
Report 5 of 2019 – Adelaide Oval redevelopment for the designated period 1 January 2019 to 30 June 2019	3 September 2019

Tasmanian Audit Office

Tasmanian Audit Office (TAS AO)	Publication date
Procurement in Local Government	19 September 2019

Victorian Auditor-General’s Office

Victorian Auditor-General’s Office (VAGO)	Publication date
Enrolment Processes at Technical and Further Education Institutes	11 September 2019
Annual Report 2018-19	29 August 2019
Managing Registered Sex Offenders	28 August 2019
Annual Plan 2019-20	27 June 2019

Western Australia Office of the Auditor-General

Western Australia Office of the Auditor-General (WA OAG)	Publication date
Opinions on Ministerial Notifications – Report 7 – 2019/20	26 September 2019
Annual Report 2018-19	19 September 2019
Opinions on Ministerial Notifications – Report 6 – 2019/20	18 September 2019
Fraud Prevention in Local Government	15 August 2019
Access to State-Managed Audit Mental Health Services	14 August 2019
Delivering Western Australia’s Ambulance Services – Follow-up Audit	31 July 2019
Opinion on Ministerial Notification – Report 2 – 2019/20	26 July 2019
Opinions on Ministerial Notifications – Report 1 – 2019/20	19 July 2019

New Zealand Office of the Auditor-General

New Zealand Office of the Auditor-General (NZ OAG)	Publication date
Our observations on Waikato River Authority’s freshwater restoration operations	25 September 2019
Inquiry into Waikato District Health Board’s procurement of services from HealthTap	20 September 2019
Crown investment in freshwater clean-up	18 September 2019
Managing freshwater quality: Challenges and opportunities	11 September 2019
Public accountability: A matter of trust and confidence	3 September 2019
Main matters arising from the 2017/18 audits of district health boards	28 June 2019

Other Useful Resources

The Treasury (Australian Government)

Recent publications included:

Name	Publication date
Treasury Corporate Plan 2019-20	5 September 2019
Financial Services Royal Commission Implementation Roadmap	19 August 2019

Independent Commission Against Corruption (ICAC)

Recent media releases included:

Name	Publication date
Public enquiry into allegations concerning political donations	31 July 2019
Operation Ember public enquiry continues	30 July 2019
New ICAC public enquiry into lobbying	18 July 2019
ICAC Operation Skyline public inquiry to resume	16 July 2019

Independent Pricing & Regulatory Tribunal (IPART)

Recent IPART papers and reports included:

Name	Industry	Type of document	Publication date
Review of water pricing	Water	Issues Paper	17 September 2019
2020-21 rate peg for NSW Councils	Local Government	Fact Sheet	12 September 2019
Indexation of contribution rates	Local Government	Information Paper	26 July 2019
Reporting Manual – Annual compliance reporting – July 2019	Energy	Reporting Manual	11 July 2019
Electricity networks audit guideline – Critical infrastructure licence conditions – July 2019	Energy	Guidelines/Procedures	11 July 2019
Assessment of the Hills Shire Council’s Contributions Plan 12	Local Government	Final Report	11 July 2019
Review of rate of return and remaining mine life from 1 July 2019 – 9 July 2019	Transport	Final Report	9 July 2019
Pricing arrangements for recycled water and related services	Water	Final Report	1 July 2019

Name	Publication date
New ACNC Governance Toolkit available for charities	26 August 2019
New governance resources for charities	23 August 2019
External Conduct Standards now in effect	25 July 2019