September 30, 2022

Are you an AFS Licensee – Changes to your financial reporting requirements are required this year – Financial Services

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ASIC has changed financial reporting requirements for AFS licensees to align with changes in accounting standards. The new reporting requirements require AFS licensees’ financial reports to contain information consistent with the requirements of for-profit entities prepared in accordance with the requirements of the Australian Accounting Standards Board.

The new financial reporting requirements require:

  • AFS licensees who have a public responsibility to comply with the disclosure requirements of the comprehensive standards;

  • all AFS licensees to apply all requirements for recognition and measurement of assets, liabilities, income and expenses

  • all AFS licensees to prepare cash flow statements; and

  • AFS licensees that have controlling entities must submit consolidated financial statements.

The new financial reporting requirements also allow AFS licensees who do not have public accountability to rely on a simplified disclosure regime, as outlined in the accounting standards.

An AFS licensee has public liability when:

  • AFS Licensee’s debt or equity instruments are traded on a public market, or AFS Licensees are in the process of issuing such instruments to be traded on a public market (a domestic or foreign exchange , an over-the-counter market, including local and regional markets); Where

  • AFS Licensees hold assets in fiduciary capacity for a broad group of foreigners as one of its main activities – this includes AFS Licensees who hold client funds.

What does this mean for AFS licensees?

Changes to financial reporting requirements apply to financial reporting for most AFS licensees using the public accountability test.

The new disclosure requirements of the full standards should be applied to certain AFS licensees in order to avoid any doubt as to whether they have a public responsibility or because they are large or sophisticated AFS licensees with greater impact on the market. These AFS licensees include, but are not limited to:

  • Retail OTC derivatives issuance

  • OTC Derivative Traders

  • wholesale trustees

  • Responsible entities; and

  • Business advisors who deal with financial products.

ASIC has updated Form FS70: Australian Financial Services Licensee Profit and Loss and Balance Sheet Statement which will be available at the end of June 2022.


Beginning with fiscal years beginning July 1, 2021, AFS licensees are no longer able to prepare special purpose financial reports that do not contain all of the information required by comprehensive accounting standards. However, AFS licensees may elect to defer any new financial reporting requirements for one (1) year. This means that AFS licensees who have prepared special purpose financial reports for the last financial year and who do not prepare financial reports under Chapter 2M of the Companies Act can defer any new financial reporting requirements. fiscal years beginning on or after July 1, 2022.

Transitional provisions also apply to AFS licensees who submit financial reports under Chapter 2M of the Companies Act, have no public accountability and would otherwise be required to provide general information under accounting standards complete.

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