One month into FY21 and ASIC is yet to address the impact of AASB 2020-2 on AFSL licensees despite growing concerns that the standard will exacerbate red tape, placing significant costs and compliance pressures on licensees.
As was previously reported in May, there is an expectation of โcarnageโ in the financial services industry as AFSL licensee holders, looking to manage costs of compliance introduced by the new General Purpose framework, en-masse retire their own licences and seek a Corporate Trusted Representative (CAR).
This will mean a corporatising of the responsibility for policing AFSL compliance effectively farmed out to these โsuper-AFSLsโ, rather than having a direct relationship between licensee and ASIC.
Many licensees are now actively weighing up their options but are yet to have full visibility about what ASICโs approach will be. Nicholas Benbow, Director, Audit and Assurance at William Buck adds:
โASIC needs to address the impact of AASB 2020-2 on AFSL licensees as presently the Form 71 which auditors attach to a licenseeโs disclosures under s.989B refers to the current status quo โ thatโs reporting and non-reporting entities,โ said Mr Benbow.
โItโs becoming more and more urgent for ASIC to pass comment and the Form 71 will soon be rendered obsolete.โ
Extra compliance will fall onto licensees because the AASB has made it clear that AFSL licensees fall within the scope of AASB 2020-2 Amendments to Australian Accounting Standards, which has ended the usage of Special Purpose Financial Reports by entities that report to ASIC, which are currently and mostly self-designated as non-reporting entities under Australian Accounting Standards.
This is notwithstanding that under s.989B of the Corporations Act the annual financial reporting requirements of AFSL licensees to ASIC consist only of an audited balance sheet and profit and loss statement.
โSo over 6000 AFSL licensees will face elevated reporting and auditing requirements under the General-Purpose framework, with disclosure obligations not too far removed from those required by ASX-listed entities,โ said Mr Benbow.
For more information on why AFSL licensees will likely be required to prepare General Purpose Financial Statements and the raft of new accounting and disclosure requirements theyโll be privy to, please read Nicholas Benbowโs article New reporting requirements likely to precipitate a major exodus of AFSL licensees here.
About William Buck
William Buck is a leading mid-tier firm of accountants and advisors with over 100 Directors and 900 professional staff across Australia and New Zealand. Throughout our 125-year history, we have assisted individuals, progressive businesses and community organisations, with a strong focus on the middle market.
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E: Danielle.shaw@williambuck.com
