ASIC notes the decision by West Wits Mining Limited (West Wits) to write down the total capitalised exploration and evaluation expenditure of $9.63 million for its Derewo River Gold Project in Indonesia (Derewo Project) in its half-year financial report to 31 December 2018.
ASIC had raised concerns on the impairment assessment of the Derewo Project in the West Wits financial report for the year ended 30 June 2018. ASIC questioned the supportability of the recoverable amount in the absence of obtaining regulatory certification for the project since 2014.
ASIC also notes the decision by West Wits to account for and disclose a joint arrangement in its financial report for the year ending 30 June 2019.
ASIC had raised concerns that West Wits did not account for and make appropriate disclosures in its financial report for the year ended 30 June 2018 for an agreement with another company to mine and rehabilitate a tenement.
As outlined in ASIC media release 19-143MR Major financial reporting changes and other focuses, impairment testing and asset values, and off balance sheet accounting remain focus areas for financial reporting at 30 June 2019.
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 to financial reporting, and to the processes and analyses supporting the information in the financial report. This is particularly important for potentially complex areas such as assessing impairment of non-financial assets and accounting for joint arrangements.