Hundreds of financial planning practices could incur huge fines or lose the right to operate their businesses if they fail to produce overdue 2004 annual accounts and auditors reports, the corporate watchdog has warned.
According to the Australian Securities and Investments Commission (ASIC) there are currently over 600 Australian Financial Services License (AFSL) holders with overdue annual accounts.
“This is a disturbingly high number, as it means that approximately 15 per cent of the total number of AFS licensees are currently in breach of their obligations,” said ASIC executive director of financial services regulation, Ian Johnston.
As this is the first time that many AFSL holders have had to give annual details of their financial situation to ASIC, Johnston said that licensees with overdue accounts – some due as far back as August last year- would not be punished immediately.
However, Johnston said that when they are called on by ASIC, these businesses will have to show that they are in the process of fulfilling their obligation, and if the report is not submitted soon after, they will be fined or have their AFS license cancelled.
The requirement to submit a report is part of the Corporations Act 2001, which states that a profit and loss statement, balance sheet and an auditors report – all paid for by the licensee – need to be handed to ASIC every year.
The auditor’s report needs to detail the accuracy of accounts, the effectiveness of the licensee’s internal controls and show that a client’s money and property have been properly dealt with.
All of this information needs to be handed in to ASIC within three months of the end of each business’s financial year, or within two months for non-body corporate licensees.
