ASIC urged to clarify AFSL reporting changes

Accounting firm William Buck said recent amendments to Australian accounting standards could see AFSLs fall under the general purpose reporting framework, meaning they’ll be forced to supply more complex financial statements in their reporting to ASIC.

“Extra compliance will fall onto licensees because the AASB has made it clear that AFSL licensees fall within the scope of AASB 2020-2 Amendments to Australian Accounting Standards, which has ended the usage of Special Purpose Financial Reports by entities that report to ASIC, which are currently and mostly self-designated as non-reporting entities under Australian Accounting Standards,” the firm said.

“This is notwithstanding that under section 989B of the Corporations Act the annual financial reporting requirements of AFSL licensees to ASIC consist only of an audited balance sheet and profit and loss statement.”

William Buck director of audit and assurance Nicholas Benbow said unless the regulator acted to clarify the situation, AFSLs would be required to prepare general purpose financial statements and fall under a raft of new accounting and disclosure requirements.

“Over 6,000 licensees will face elevated reporting and auditing requirements under the general purpose framework, with disclosure obligations not too far removed from those required by ASX-listed entities,” Mr Benbow said.

“ASIC needs to address the impact of AASB 2020-2 on AFSL licensees as presently the Form 71 which auditors attach to a licensee’s disclosures under section 989B refers to the current status quo – that’s reporting and non-reporting entities.

“It’s becoming more and more urgent for ASIC to pass comment and the Form 71 will soon be rendered obsolete.”

The firm said since first raising the issue in May it had received inquiries from licensees who were “increasingly concerned” around their potential new obligations.

It added that without clarification, a flood of licensees may look to become corporate authorised representatives to farm out their compliance responsibilities to a larger AFSL.