ASIC notes the announcement to the ASX by Earlypay Limited (Earlypay) of an error in the classification of an unsecured corporate bond of $19.9 million.
Earlypay incorrectly classified the bond as non-current in its financial report for the year ended 30 June 2021 and will amend this error in its financial report for the half-year ended 31 December 2021.
ASIC had raised concerns about the non-current classification in Earlypay’s financial report for the year ended 30 June 2021. The bond should have been classified as current because Earlypay did not have an unconditional right to defer settlement for at least twelve months from the balance date.
As emphasised in ASIC media release 21-129MR ASIC highlights focus areas for 30 June 2021 financial reports under COVID-19 conditions, clarity around debt refinancing and correct classification between current and non-current, are important in providing useful and meaningful information to investors and other users of financial reports.
Directors are primarily responsible for the quality of a company’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.
ASIC’s financial reporting surveillance program aims to improve the quality of financial reporting and to ensure financial reports have been prepared in accordance with the law. This supports investor confidence and the integrity of Australia’s capital markets.
We conduct regular reviews on a risk-basis of the financial reports of selected listed companies and other significant public interest entities to monitor compliance with the Corporations Act and Australian Accounting Standards. ASIC alerts the market prior to each reporting season about current topics or issues that will be the focus of the reviews.