ASIC notes the decision by Academies Australasia Group Limited (Academies) to record a make good provision of $452,000 in its financial report for the year ended 30 June 2021. As a lessee of properties, Academies can incur an obligation to restore the assets to a certain condition as set out in its lease agreements.
ASIC had raised concerns about the lack of any make good provision in Academies' financial report for the year ended 30 June 2020.
As outlined in ASIC media release 21-129MR ASIC highlights focus areas for 30 June 2021 financial reports under COVID-19 conditions, the adequacy of provisions to meet obligations is important in providing useful and meaningful information to investors and other users of financial reports.
Directors are primarily responsible for the quality of an entity's financial report. This includes ensuring that management produces quality financial information on a timely basis. Companies must have appropriate processes, records and analysis to support information in the financial report.
Companies should also apply appropriate experience and expertise, particularly in more difficult and complex areas of accounting policies and estimates.
