ASIC announces financial reporting changes for AFS licensees

ASIC has today announced new financial reporting requirements for Australian financial services (AFS) licensees, following changes to the accounting standards.

Under the new reporting requirements, AFS licensees’ financial reports must contain disclosures consistent with the financial reports of other for-profit entities, prepared under standards set by the Australian Accounting Standards Board (AASB).

ASIC Commissioner Sean Hughes said, ‘These reporting changes will assist those who prepare financial reports under both sets of requirements, and provide relevant information for ASIC’s surveillances of licensees and for other users of financial reports.’

Changes for for-profit entity reports

From financial years commencing 1 July 2021, for-profit companies, registered schemes and disclosing entities that prepare financial reports under Chapter 2M of the Corporations Act 2001 (the Act), and which are not reporting entities, can no longer prepare special purpose financial reports (SPFRs) that do not contain all disclosures required in the full accounting standards.

Accounting standards instead allow entities that do not have public accountability to use a simplified disclosure regime. Entities that have public accountability must comply with the disclosure requirements of the full standards. All entities must apply the full recognition and measurement requirements for assets, liabilities, income and expenses.

An entity has public accountability where:

  • its debt or equity instruments are traded in a public market, or it is in the process of issuing such instruments for trading in a public market (a domestic or foreign stock exchange or an over-the-counter market, including local and regional markets); or
  • it holds assets in a fiduciary capacity for a broad group of outsiders as one of its primary businesses (this would include AFS licensees that hold client monies).

Reporting by AFS licensees

The AASB’s new reporting regime will apply for the Chapter 7 financial reports of most AFS licensees, using the public accountability test.

The disclosure requirements of the full standards would also be required to be applied by some licensees to avoid doubt as to whether they have public accountability (including licensees that typically hold client monies or assets), or because they are large or sophisticated licensees with greater market impact. These are licensees that are:

  • regulated by the Australian Prudential Regulatory Authority;
  • participants in a licensed market;
  • participants in a clearing and settlement facility;
  • retail over-the-counter derivative issuers;
  • wholesale electricity dealers;
  • corporate advisors that deal in financial products;
  • over-the-counter derivative traders;
  • wholesale trustees;
  • responsible entities of a registered scheme;
  • corporate directors of a corporate collective investment vehicle;
  • providers of a custodial or depository service;
  • operators of an investor directed portfolio service.

All licensees will be required to prepare a cash flow statement. In addition to single entity financial statements, consolidated financial statements must be presented where the licensee has controlled entities.

There may also be some additional disclosures for licensees that had previously prepared SPFRs, including in areas such as related party transactions, financial instrument exposures and lease accounting.


The new disclosure requirements apply from financial years commencing on or after 1 July 2021, but many licensees can choose to defer any new disclosure requirements by one year.

AFS licensees that prepared SPFRs last year, and that do not prepare reports under Chapter 2M, can choose to defer the new disclosure requirements to financial years commencing on or after 1 July 2022. Comparative information need not contain the new disclosures in the first report prepared under the new requirements.

Similar transitional arrangements apply for additional disclosures for licensees that report under Chapter 2M, do not have public accountability, and would otherwise be required to give additional disclosures under the full standards.

Form FS 70

The changes will be given legal effect through the certification section of the prescribed ASIC Form FS 70 Australian financial services licensee profit and loss statement and balance sheet. The revised form will be available in late June 2022.

© Australian Securities and Investments Commission. Reproduced with permission.