As Australian entities continue to be impacted by the coronavirus pandemic, many are finding it, or may find it, difficult to adhere to their financial reporting obligations. The Australian Securities and Investments Commission (ASIC) has acknowledged this and has granted some reporting relief for certain entities.
What relief has been granted?
The relief announced on 9 April 2020 takes the form of a one-month extension for unlisted entities with balance dates from 31 December 2019 to 31 March 2020 to lodge financial reports under Chapters 2M and 7 of the Corporations Act 2001.
The deadline deferral will not apply to those entities where the normal reporting deadline has already passed. For example, a managed investment scheme with a 31 December 2019 year end would have had to submit its financial report by 31 March 2020. The one-month extension will not apply in this case.
The one-month extension has the following impacts on Chapter 2M lodgement periods for unlisted entities:
Full year financial reports
- unlisted disclosing entities and unlisted registered schemes – extended from 3 to 4 months
- all other unlisted entities (non-disclosing public and proprietary companies) – extended from 4 to 5 months
Half year financial reports
- unlisted disclosing entities – extended from 75 days to 75 days plus 1 month
Chapter 7 reporting deadlines have been affected as follows:
- unlisted Australian Financial Services (AFS) licensees that are bodies corporate and are also disclosing entities or registered schemes – extended from 3 to 4 months
- unlisted AFS licensees that are body corporates and are not disclosing entities or registered schemes – extended from 4 to 5 months
- AFS licensees that are not bodies corporate – extended from 2 to 3 months
What about listed entities?
ASIC has not granted any relief from financial reporting obligations to listed entities at this stage. There is a relatively small number of listed entities with reporting periods that end on 31 March 2020, and it appears ASIC has not yet come across any evidence to suggest that these entities will struggle to meet their reporting obligations as a result of the pandemic.
What about 30 June 2020 reporting periods?
ASIC has indicated it will continue to monitor market conditions and how the pandemic is affecting the ability of entities to meet their financial reporting obligations. Further announcements regarding reporting relief may be made closer to 30 June 2020, depending on how the COVID-19 situation unfolds.
What should entities do now?
COVID-19 is throwing the not-so-proverbial curve ball at entities at the moment, putting a strain on usual business processes, including those related to financial reporting. Entities should take some time to assess the financial reporting implications of the pandemic in the context of their business.
If circumstances allow it, unlisted entities should continue to adhere to the statutory reporting deadlines, especially where this may be required by certain stakeholders or terms of financing arrangements. Where this is not possible, entities should plan accordingly to ensure they will be in a position to meet the deferred lodgement date. Either way, communication with advisers and auditors sooner rather than later will be important to ensure everyone is working towards the same deadline.
Where entities, especially listed entities with 31 March 2020 balance dates, genuinely anticipate that they will be unable to lodge their financial reports by the statutory deadline as a result of the pandemic, they should apply to ASIC for an extension. ASIC recommends that such an application should be made at least 14 days before the usual reporting deadline and should contain sufficient information to allow ASIC to evaluate the impact of current events on the entity.
We are here to help. We have a dedicated COVID-19 resource centre for directors of companies and not-for-profits seeking information. For assistance or to learn how to access federal and state stimulus please contact your HLB Mann Judd adviser.