Are you an AFS Licence Holder – Changes to your Financial Reporting Requirements are required this year

ASIC has changed the financial reporting requirements for AFS Licensees to align with changes to the accounting standards. The new reporting requirements require the financial reports of AFS Licensees to contain disclosures that are consistent with the requirements of for-profit entities prepared in line with the requirements of the Australian Accounting Standards Board.

The new financial reporting requirements require:

  • AFS Licensees that do have public accountability to comply with the disclosure requirements of the full standards;
  • all AFS Licensees to apply the full recognition and measurement requirements for assets, liabilities, income and expenses
  • all AFS Licensees to prepare cash flow statements; and
  • AFS Licensees that has controlling entities to submit consolidate financial statements.

The new financial reporting requirements also allow AFS Licensees that do not have public accountability to rely on a simplified disclosure regime as outlined under the accounting standards.

An AFS Licensees has public accountability where:

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

What does this mean for AFS Licensees?

The changes to the financial reporting requirements apply to the financial reports of most AFS Licensees using the public accountability test.

The new disclosure requirements of the full standards are required to be applied to some AFS Licensees to avoid doubt as to whether they have public accountability or because they are large or sophisticated AFS Licensees with greater market impact. These AFS Licensees include but are not limited to:

  • Retail over the counter derivative issues;
  • Over the counter derivative traders;
  • Wholesale trustees;
  • Responsible entities; and
  • Corporate advisors that deal in financial products.

ASIC has updated the Form FS70: Australian financial services licensee profit and loss statement and balance sheet which will be made available at the end of June 2022.


From financial years commencing 1 July 2021, AFS Licensees are no longer able to prepare special purpose financial reports that do not contain all the of the disclosures required by the full accounting standards. However, AFS Licensees can choose to defer any new financial reporting requirements by one (1) year. This means that AFS Licensees that prepared special purpose financial reports for the last financial year and do not prepare financial reports under Chapter 2M of the Corporations Act can defer any new financial reporting requirements to financial years commencing on or after 1 July 2022.

Transitional arrangements also apply to AFS Licensees that submit financial reports under Chapter 2M of the Corporations Act, do not have public accountability and would otherwise be required to give general disclosures under the full accounting standards.

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