August 13, 2022

Company — Stricter financial reporting requirements for AFSLs

From the 2021-2022 financial year, holders of Australian Financial Services Licenses (“AFSLs”) will be subject to more stringent financial reporting requirements.

Recent changes to Australian accounting standards have removed the right of AFSLs and certain other private sector profit-making entities (e.g. large private companies, unlisted public companies and small crowdfunded private companies ) self-assess financial reporting requirements. and prepare special purpose financial reports. Now, AFSLs will have to comply with the disclosure requirements in the comprehensive standards.

The test is whether the AFSL or another entity has a “public responsibility”. This includes entities that hold assets in fiduciary capacity for a large group of strangers (e.g., customer money) as one of its core businesses.

Some AFSLs may be able to defer their new disclosure obligations for another year.

The certification section of the ASIC FS 70 (“Australian Financial Services Licensee Profit and Loss Statement and Bilan”) form will be revised at the end of June 2022 to reflect new changes in Australian accounting standards.

Sources: ASIC, 22-128MR, [media release]June 3, 2022, accessed June 3, 2022.

Australian Accounting Standards Board, “Key facts: AASB 2020-2 Amendments to Australian Accounting Standards – Removal of Special Purpose Financial Statements for Certain For-Profit Private Sector Entities,” Australian Accounting Standards Board website, accessed June 3, 2022 .

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