As the 30 June 2010 year end approaches, the Institute of Chartered Accountants in Australia (the Institute) has released practical guidance to address the key issues impacting preparers of financial reports, auditors and audit committees with their year end professional responsibilities.
The Institute guidance entitled, Essential guidance for 30 June 2010 financial year end, highlights the circumstances that are of particular relevance for this reporting year end and require the exercise of significant professional judgment. The analysis was prepared following research into the top 30 Australian listed entities.
“Despite improvement in Australia’s business conditions, and the country avoiding Europe’s sovereign debt risks, the challenges for June 2010 financial year end reporting continue to be determining fair value, impairment of assets and going concern,” said Mr Lee White, General Manager of Leadership and Quality at the Institute.”
“Looking forward to the June 2010 reporting season the Institute anticipates increased fair value movement in financial instruments to continue as well as some reversals of impairments from prior years. An increase in the cost of capital, exchange rate fluctuations and more mergers and acquisitions are expected in the second half of 2010.”
“The continued volatility of the Australian dollar and some commodities place great pressure on corporate risk management and hedging strategies…Liquidity remains tight for businesses, therefore, careful forecasting of short to medium term finance needs is critical, as is clearly understanding the terms and conditions with bankers and financers.” Mr White said.
Bi-annually the Institute provides essential guidance to preparers, auditors and audit committees to assist them in their roles as professionals. This is part of an ongoing body of work produced by the Institute that examines the issues that have impacted financial reporting periods, while also, scrutinising the areas that require greater attention during the next six months.