AUSTRALIA: ASIC Announces Financial Reporting Changes for AFS Licensees

Wednesday June 8 2022

On 3^rd June 2022, the Australian Securities and Investments Commission (ASIC) announced new financial reporting requirements for Australian financial services (AFS) licensees, following changes to the accounting standards.

Under the new reporting requirements, AFS licensees’ financial reports must contain disclosures consistent with the financial reports of other for-profit entities, prepared under standards set by the Australian Accounting Standards Board (AASB).

The AASB’s new reporting regime will apply for the financial reports of most AFS licensees, using the public accountability test.

The disclosure requirements of the full standards would also be required to be applied by some licensees to avoid doubt as to whether they have public accountability (including licensees that typically hold client monies or assets), or because they are large or sophisticated licensees with greater market impact. These are licensees that are:

• regulated by the Australian Prudential Regulatory Authority;
• participants in a licensed market;
• participants in a clearing and settlement facility;
• retail over-the-counter derivative issuers;
• wholesale electricity dealers;
• corporate advisors that deal in financial products;
• over-the-counter derivative traders;
• wholesale trustees;
• responsible entities of a registered scheme;
• corporate directors of a corporate collective investment vehicle;
• providers of a custodial or depository service;
• operators of an investor directed portfolio service.

The new disclosure requirements apply from financial years commencing on or after 1^st July 2021, but many licensees can choose to defer any new disclosure requirements by one year.

The changes will be given legal effect through the certification section of the prescribed ASIC Form FS 70 Australian financial services licensee profit and loss statement and balance sheet. The revised form will be available in late June 2022.

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