ASIC reveals transactional scrutiny
The Australian Securities and Investments Commission (ASIC) has revealed the degree to which it is scrutinising the transactional underpinnings of business being carried out by financial services companies and how they are reported.
The regulator this week went to the trouble of declaring that it had noted that financial services group, Spring FG Limited had changed its policy for recognising commissions earned on property development contracts as revenue with no revenue being recognised until the company's client had exchanged unconditional contracts with a developer.
The ASIC announcement said the regulator had raised a preliminary concern with Spring about the recognition of revenue from property development commissions before the certainty provided by the exchange of unconditional contracts between developers and Spring's clients in its financial report for the year ended 30 June 2015.
However it said that in its 31 December 2015 interim financial report Spring had elected to early adopt Australian Accounting Standard AASB 15 Revenue from Contracts with Customers and now recognises revenue from contracts with property developers only when the developer had exchanged an unconditional contract for the sale of a property with a Spring client resulting in later recognition of revenue and smaller trade receivables and payables balances.
ASIC said revenue recognition continues to be an area of focus in its financial reporting surveillance program.
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