Companies and Securities Law: Financial Reporting and ASIC Guidelines

This report provides a comprehensive analysis of Companies and Securities Law, specifically focusing on financial reporting and annual report requirements. It details the regulations and standards governing the preparation of financial statements, including assets, liabilities, and various accounting treatments. The report emphasizes the importance of annual reports in disclosing crucial information to stakeholders, such as board of directors, financial positions, and corporate social responsibilities. It examines the role of the Australian Securities and Investments Commission (ASIC) in setting guidelines for annual reports to ensure transparency and accuracy. The report also discusses the significance of effective disclosure in the operating and financial review (OFR), as outlined in ASIC Regulatory Guide 247 (RG 247), to provide insights into a company's operations, financial position, and future prospects. Overall, the report highlights the importance of compliance with regulatory frameworks and the impact of accurate financial reporting on corporate governance and stakeholder trust.

COMPANIES AND
SECURITIES LAW

Table of Contents
PART 1............................................................................................................................................2
PART 2............................................................................................................................................2
REFERENCES................................................................................................................................8

PART 1
When the management and a business entity going to make the financial statements as
well as several accounts then there are some specific and proper rules and regulations are to be
prepared by the authority party. At the time of preparing as well as formulating financial
accounts then by considering several arrangements as well as disclosures the management able to
prepare. Apart from this, there are different kinds of accounting standards are to be framed by the
authority and regulatory frameworks. The standards are to be framed for the national companies
as well as international business entities to prepare the statements of financials (Park, 2017).
Different kinds of reporting standards and disclosures are such as assets, liabilities, taxes,
particular kind of expenses, reserves, bad debts, insurance, taxation etc. In the accounting and
financial world there are several types of the standards are available which helps to make the
accounting treatments and adjustments in the financial statements like as profit and loss, balance
sheet, cash flow etc. The existing arrangements to prepare financial statements as well as
reporting are adequate and effectual for the companies up to the better extent. For example: when
the business entity has bad debt as well as taxation amount in the financial transactions then by
using the existing accounting standards the firm able to know that in which ways tax and bad
debt will be treated in the financial statements. Apart from this, by considering the existing as
well as current kind of arrangements in order to reporting the financial transactions the company
is highly able to make all the statements for accounts and finance up to the adequate manner
(Huang, 2013). Furthermore, due to this condition of the firm in terms of financial is to be
determined in the proper way.
PART 2
The companies which are operating in the industry and market along with the legal
identity then it is necessary to show its all the informations about the firm in appropriate way.
For this, there are different kinds of ways and methods available which helps to the management
in order to publish their all the informations in eyes of corporations and public. One of the best
as well as appropriate kind of method to publish business entity's informations is such as annual
report where all varieties of the necessary data and informations are provided. When the business
entity publish its annual report then it is highly necessary that all things and informations must
consider in that. Different kinds of informations which are compulsory to include in the annual
report are like as board of directors, history and growth of the business entity from initial up to

the last year, financial position and different informations related to finance, corporate social
responsibilities etc (Maubane, Prinsloo and Van Rooyen, 2014). The annual report gives very
clear idea to the users such as corporations and public to determine position of the company in
terms of financials and non financials. When the management is going to make the report then it
needs very clear as well as in the concise form by which the users easily able to identify about
the company. When the overall annual report is very concise and provide highly brief data and
information about the whole business entity then users will attract to analyse and read it. In
opposite to this, in case the annual report is too much big and all the informations are to be
provided in depth and detail then no one will attract towards it. The reason is that for derive
business position the users have to read all the report for know the position in case of detail
information.
There are various kinds of standards are settled and framed by the ASIC which stands for
Australian Securities and Investments Commission for prepare as well as publish the annual
report of an organisation. In the annual report it is necessary to include that which kind of
strategies are followed by the firm in business process in the particular case where it was face
very typical and complex situation (Bainbridge, 2015). As per the guidelines of the ASIC, annual
report of all the firms must be clear, informations has to give in depth and brief, concise as well
as must show all the financial and accounting treatments in the proper way. Apart from this, al
the accounting notes as well as disclosures are also compulsory to provide in the annual report by
which the users able to know that which kind of transactions is in which way treated in the
financial statements. Further, the annual report shows that the business entity giving how much
amount of dividend to the shareholders which is highly necessary.
Generally all companies have to disclose its annual reports to its shareholders at the end
of every financial year. Annual reports are the short report of company activities or strategies
which are adopted by companies during financial year. Annual reports should reflect true and
fair picture of company.There is proper closure of all the policies and strategies adopted by
company in an financial year and all there should be closure of all the investments done by
company (Feldman and et.al., 2015).
As in the case with the Australian companies they are not providing their true and fair
annual reports of there companies as they have not disclosed there all the strategies and

activities that have been taken in an financial year , and has not disclosed any policies. Regarding
these problem / issue a committee was appointed under the ASIC (Australian security and
investment commission ) which have laid down some norms and rules regarding the true and fair
view of annual reports and improving the quality of reports in Australia. Now the Australian
company has to follow there rules made by Australian security and investment commission in
order to give true and fir picture of annual reports (Faqihi, 2013).
Some of the guidelines given by Australian security and investment commission are:
11 There should be effective disclosure of all the accounting policies followed by Australian
company. For example hoe the company is charging depreciation on there fixed assets at
what rate and what method they are applying.11 Disclosure of all financial information in financial reports, and disclosure of all financial
transaction taken place during the financial year For example - purchase of machinery ,
investment done by company and any return they are getting from investment.11 Proper information should be there in reports regarding auditors of company , if company
is terminating , replacing or appointing new auditor than it should be clearly specified in
the reports and proper information regarding auditor will be there in annual reports that
for how much time auditor is appointed (Wang, 2015).11 If any Australian company is dual listed than it should be clearly mention in reports than
company is dual listed.11 Company has to conduct various meetings on regular bases like Annual general meeting ,
general meeting so that shareholders are regularly updated with the company policies and
strategies followed by company.11 There should be proper disclosure of all investments made by companies and what
company is earning in return. Or company has to disclose that either it is following the
act or not under which the company id appointed11 There should be proper closure of profits or the reserves made by company during the
year or any losses faced by company during the year.11 Companies have to provide their reports to ASIC within 4 months of the end of financial
year (Cohn, 2014).

11 Companies has to disclosed all the information about directors of the company and their
responsibility toward company.
111 10. In order to keep financial books ASIC has given list of books which should be kept
by the company some of them are :general ledger, general journal, financial reports etc.
On 27 March 2013, there was release of Regulatory Guide 247 by Australian Securities
and Investments Commission (ASIC) as per which it has been stated that there must be effective
disclosure in an operating and financial review (RG 247) so that on the basis of same, proper
guidance can be provided on the preparation of an operating and financial review (OFR) under
directors’ report of company that is a listed entity. In the annual reporting done by listed firms,
OFR serves as the key part. It is essential for the shareholders or unit holders to finalise
information that is needed for making informed assessment of the operations of an organisation.
Also, to assess the financial position of firm as making appropriate business strategies along with
searching suitable prospects for the future financial years it proves to be highly beneficial.
However, RG 247 follows the Consultation Paper 187 (CP 187) which states that they must be
actual revelation in the operating and financial review of firm issued by ASIC in September 2012
(ASIC Regulatory Guide 247 Effective disclosure in an operating and financial review, 2013). In
accordance with the feedback gained by respondents on CP 187, there has been improvement in
ASIC with respect to wording and illustrative examples in RG 247.
Presenting the narrative and analysis
There are some recommendations given by RG 247 in terms that some good disclosure
practices should be there in an OFR by which the narrative and analysis can be presented which
are like:
 To show data in a single self-contained section under the annual report
 To show company’s data in a way stated as follows:
o It must be complementary to presented data as well as consistent as per disclosed
data in financial report along with company’s other disclosure announcements.
o It should be balanced and unmistakeable so that, in the annual reports, there will
be no misleading information as well as and any bad news should also be given
with equal importance as that of good news (Bodie, 2013).

o Apart from that, data must be clear, concise and effective with the help of which
key information can be highlighted as well as plain language can be used. Also,
complex information must be explained in a manner that is understandable as well
as it should be presented in a logical order.
RG 247 proves to be highly helpful in providing illustrative examples of disclosure of
information with respect to the operations and financial position of organisation as well as
strategies of business. Apart from that, it also covers the prospects that company can grab in
future financial years. Along with the same, a level of detail is provided which is more likely to
be appropriate and can be used as a reference.
ASIC Regulatory Guidance (RG 247)
As per ASIC Regulatory Guidance (RG 247), it is necessary to provide information
regarding operations performed by the organisation as well as its financial position should be
tailored in such a way that individual circumstances of company can be made-to-order along
with the business environment in which firm is running its operations. In accordance with RG
247:
 Operations which organisation is performing must be described and reviewed along with
the results of same (Coffee Jr, Sale and Henderson, 2015).
 There must be explanation of underlying drivers along with the reasons behind results
gained by the firm. Also, there should be description of key developments taking place in
the reporting period that involve important factors by which results of business can get
affected.
 It is important that the qualification of entity’s auditor must be highlighted in the given
information along with underlying circumstances and describing concerns of audit
opinion.
 Apart from that, business model of the organisation must be explained as well with
stating the effects that it can lay on operations performed by the firm. Under the same,
main features of the business model must also be included like any key dependencies.
 Further, significance of particular operating segments with reference to the business as a
whole should be described as well (Hazen, 2011).
 Moreover, final results gained must be discussed in such a way that will help key
operating segments and major components.

If all these aspects will be present in the annual reports, then it shows that they are clear
and concise as well as making users aware with company’s actual financial position that involves
the consideration of future business strategies, risks and prospects.

REFERENCES
Books and Journals
Bainbridge, S., 2015. Corporate Law. West Academic.
Bodie, Z., 2013. Investments. McGraw-Hill.
Coffee Jr, J. C., Sale, H. and Henderson, M. T., 2015. Securities regulation: Cases and materials.
Cohn, S. R., 2014. Keep Securities Reform Moving: Eliminate the SEC's Integration Doctrine.
Browser Download This Paper.
Faqihi, N., 2013. Choosing Which Rule to Break First: An In-House Attorney Whistleblower's
Choices After Discovering a Possible Federal Securities Law Violation. Fordham L. Rev.
82. pp. 3341.
Feldman, D. and et.al., 2015. Shared solar: Current landscape, market potential, and the impact
of federal securities regulation. Golden, CO: National Renewable Energy Laboratory.
Accessed June. 3. pp. 2015.
Hazen, T. L., 2011. Crowdfunding or fraudfunding-social networks and the securities laws-why
the specially tailored exemption must be conditioned on meaningful disclosure. NCL
Rev.. 90. p.1735.
Huang, R. H., 2013. Private enforcement of securities law in China: a ten-year retrospective and
empirical assessment. American Journal of Comparative Law. 61(4). pp. 757-798.
Maubane, P., Prinsloo, A. and Van Rooyen, N., 2014. Sustainability reporting patterns of
companies listed on the Johannesburg securities exchange. Public Relations Review. 40(2).
pp. 153-160.
Park, J. J., 2017. Reassessing the Distinction between Corporate and Securities Law. UCLA L.
Rev. 64. pp. 116.
Wang, W. K., 2015. The Importance of 'The Law of Conservation of Securities': A Reply to John
P. Anderson's' What's the Harm in Issuer-Licensed Insider Trading?'.
Online
ASIC Regulatory Guide 247 Effective disclosure in an operating and financial review. 2013.
[PDF]. Available through:

<http://www.ey.com/Publication/vwLUAssets/Effective_disclosure_in_an_operating_and
_financial_review/$FILE/Effective_disclosure_in_an_operating_and_
%20financial_review.pdf>. [Accessed on 2nd May 2017].