ACCG2024: Part I – Research Based Report

“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” (Australian Securities and Investments Commission (ASIC) 2020, p.1).  The ASIC Chair, James Shipton, further added that, ‘Entities with businesses adversely affected by the COVID-19 pandemic should focus on the reporting of asset values and financial position. Investors will expect clear disclosure about the impacts on an entity’s businesses, any risks and uncertainties, key assumptions, management strategies and future prospects” (Australian Securities and Investments Commission (ASIC) 2020, p.1).


According to ASIC’s media release on 7 July 2020 – 20-157MR Focuses for financial reporting under COVID-19 conditions – one of the key focus areas for the annual reports are the disclosures in the Operating and Financial Review (OFR). The media release highlights that “The OFR should complement the financial report and tell the story of how the entity’s businesses are impacted by the COVID-19 pandemic. The underlying drivers of the results and financial position should be explained, as well as risks, management strategies and future prospects.”


Furthermore, according to the Conceptual Framework, the fundamental qualitative characteristics of relevance and faithful representations determine the decision usefulness of the information provided to the users of the GPFS (General Purposes Financial Statements). Given the future perspectives of the businesses that the users are interested in, it is important that companies provide as much relevant information as possible to enable them to make decisions. In light of this, on 12 August 2019 ASIC released the updated Regulated Guide (RG) 247 Effective Disclosure in an operating and financial review.


The purpose of RG 247 is to assist listed companies and their directors in meeting the requirements under s299A of the Corporations Act 2001 and in providing useful and meaningful information to shareholders when preparing the OFR.


You were lucky to get an internship with the Australian Securities & Investments Commission’s (ASIC) Financial Reporting Surveillance Program that aims to improve the quality of financial reporting by reviewing the annual financial reports of a selection of listed companies and other significant entities, to monitor compliance with the Corporations Act and Australian Accounting Standards. The Head of the Financial Reporting Surveillance Program (your boss for the time of your internship), Zachary King*, plans for the next review round to focus on the OFR and related disclosures. For preliminary research into this matter, he asks you to provide a report which highlights the current compliance by one listed company in this regard. For this, you must research into a listed ASX300 company of your choice and identify the disclosures in terms of the OFR and potential gaps.


You may review RG 247 through the following link:




* Fictitious Name


You are required to write a business report to the Head of ASIC’s Financial Reporting Surveillance Program, Zachary King, covering the following areas:


  1. Briefly summarise the importance of the operating and financial review in assessing how the financial information can assist users to make resource allocation decisions in light of the current COVID-19 pandemic. You may need to refer to some financial and business periodicals/newspapers for the financial impact of the crisis. (10 Marks)


  1. Critically evaluate whether the disclosures made by the company are consistent with the guidance provided by ASIC in Sections B, C and D of the guide (RG 247) and whether they effectively disclose the sources of estimation uncertainty as per paragraphs 125-133 of AASB 101 Presentation of Financial Statements.

(15 Marks)


  1. How do the disclosures made by your chosen company in Part 2 above meet the objective of financial reporting and the fundamental characteristics of financial

reporting as per the Conceptual Framework?                                                                                                                         (10 Marks)


  1. Based on your analysis in Part 3, provide recommendations on how your chosen company can enhance their disclosures for the year ended 30 June 2020 so that they are more closely linked with the objective of financial reporting with specific reference to the impacts of the COVID-19 pandemic on their business.

(5 Marks)


You need to attach a copy of the relevant parts of the annual report showing disclosures made by the company under the OFR. Do not attach the entire annual report.


To complete this assignment, you will need to select a suitable company yourself that meets the following criteria:


  • The company must be a constituent of the S&P/ASX 300 index


  • The company must publish audited annual financial reports in English, fully complying with IFRS or AASB standards and
  • The company must have a 30 June year end.
  • Choose the annual report for the financial year ended 30 June 2019.


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