SEVEN Western Australian listed companies have provided the required disclosure about the value of options paid to directors and staff – after some prompting from the Australian Securities and Investments Commission.
The companies are Fleetwood Corporation Limited, Independence Gold NL, Norwest Energy NL, Supersorb Environmental NL, West Australian Metals, Western Areas NL and WRF Securities Limited.
In all cases bar WRF’s, the companies issued an Australian Stock Exchange announcement to provide clarification. In WRF’s case it lodged an amended directors’ report.
The seven companies were among 22 that ASIC prompted.
To date ASIC has reviewed the directors’ reports of all listed companies with balance dates between June 30 and December 31 2003.
The vast majority of companies that reported providing options to directors and the five employees with the highest remuneration also disclosed the value of the options.
However, these 22 companies only disclosed the value of options after being contacted by ASIC.
ASIC chief accountant Greg Pound said the commission had explained that valuation of options would be a focus of its review before the reporting period.
During its review ASIC also found 20 audit reports did not appear to comply with auditing standards, or they were not qualified despite ASIC’s view that the company’s financial report did not comply with an accounting standard.
After further inquiry ASIC is considering 16 matters for action. One matter is being referred to the Companies Auditors and Liquidators Disciplinary Board and several others are expected to follow.
"Auditors play a significant role in the accountability process by providing independent assurance about the quality of a company’s financial information," he said.
"This remains an important governance measure."
The five common deficiencies of audits to date are:
p There was inadequate consideration of the significant accounting policies used by audited companies and inadequate documentation of the basis for the auditor’s conclusion on those policies;
p Audit procedures were incomplete or inadequate in areas such as unrecorded liabilities, debtor/creditor confirmations and subsequent events;
p Audit working papers were incomplete and/or did not provide evidence to support audit conclusions in significant areas of the audit;
p There was poor audit planning and poor use of audit programs that does not reflect what is required by the auditing standards; and
p There was a lack of evidence of an independent review of audit work as part of the audit quality-control process.
International accounting standards impact
THE Australian Securities and Investments Commission has released a guide to disclosing the impact on financial information in disclosure documents of International Financial Reporting Standards being adopted as Australian accounting standards.
Disclosure documents are prospectuses, product disclosure statements, offer information statements, takeover documents, scheme of arrangement documents and relevant related party transaction documents.
ASIC chief accountant Greg Pound said good disclosure documents were essential to help people make informed investment decisions.
"ASIC’s guide helps preparers of disclosure documents and their advisers by setting out what is our view of good disclosure about the impact of changing accounting standards on the reported financial results of an entity," he said.
The new standards will apply to financial reports prepared under the Corporations Acts for years commencing on or after January 1 2005.
ASIC considers that a document issued before the first annual financial report of any entity prepared under the new standards should consider information on the impact of adopting the new accounting standards.
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