ASIC notes the decision by Tempo Australia Limited (Tempo) to write down goodwill by $9.23 million, deferred tax assets (DTA) by $5.32 million and intangible assets by $0.47 million in its financial report for the half-year ended 30 June 2019.
ASIC had raised concerns on the impairment assessment of goodwill, intangible assets and DTA at 31 December 2018. ASIC questioned the supportability of earnings growth and gross margins used in testing goodwill and other intangible assets for impairment and the recoverability of DTA having regard to losses in the financial years ended 31 December 2017 and 31 December 2018 and market conditions.
As outlined in ASIC media release 19-143MR Major financial reporting changes and other focuses, impairment testing and asset values remain a focus area for financial reporting at 30 June 2019.
Directors are primarily responsible for the quality of an entity’s financial report. This includes ensuring that management produces quality financial information on a timely basis. Companies must have appropriate processes, records and analysis to support information in the financial report.
Companies should apply appropriate experience and expertise, particularly in more difficult and complex areas of accounting policies and estimates such as impairment of non-financial assets.
