ASIC's areas of focus flag carbon and mining taxes

The Australian Securities & Investments Commission (ASIC) has released the results of its reviews of financial reports for years and half-years ended 31 December 2011 and announced its areas of focus for 30 June 2012 financial reports. ASIC Commissioner John Price said that this year, a new focus will be revenue recognition and expense deferral policies. ASIC also flagged directors' attention on the carbon tax and mining tax.

At 30 June 2012, ASIC says directors and auditors should focus particularly on:

• revenue recognition and expense deferral policies;
• asset values and the disclosure of associated assumptions;
• off-balance sheet arrangements; and
  going concern assessments.

ASIC said directors should carefully consider asset values and the appropriateness of underlying assumptions, particularly in the context of current economic conditions. A particular focus for ASIC will be companies with substantial assets held in emerging economies. ASIC says entities impacted by the introduction of the carbon tax from 1 July 2012 will need to take the tax into account when performing their impairment testing of non-current assets.

In ASIC's view, entities affected by the mining tax will need to ensure they obtain the necessary asset valuations if they adopt the market approach to the starting base allowance. Entities adopting this approach will also need to ensure they correctly account for any resultant changes in their deferred tax balances, ASIC said.