ASIC puts companies on notice over COVID-19 as reporting season looms

The securities regulator has put corporate Australia on notice it will be scrutinising how the COVID-19 pandemic will be treated in their accounts during the upcoming reporting season, demanding the hit from the virus to be explained clearly to investors.

The Australian Securities and Investments Commission wants companies to provide clear and meaningful disclosures on both negative and positive impacts stemming from the pandemic on asset values, supply chains, and provisions, while also giving an update on solvency.

“In the current environment, the quality of financial reports and related disclosures is more important than ever for investors and to maintain confident and informed markets,” said ASIC chairman James Shipton.

Ethical Partners Funds Management investment director Nathan Parkin said he would be looking for companies “to be explicit” about the benefits of lower rental payments and any government assistance.

“A number of companies have already reported better-than-expected revenue and profits through COVID-19 but have not been specific about the impact of one-off reduced expenses. This is important to establish a normal run rate for profit in financial 2021,” he said.

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