ASIC Enforcement Action – Failure to lodge financial reports

The Australian Securities and Investment Commission’s (ASIC) recent enforcement action in the financial services industry has targeted licensees who have failed to lodge financial reports with ASIC. The obligation to lodge financial reports with ASIC each year is set out in section 989B of the Corporations Act.

From the period between 1 July 2022 to 31 December 2022, ASIC prosecuted fifteen (15) companies for failing to comply with their obligations to lodge financial reports with ASIC.

 

Case Examples

Some examples are listed below, including the penalties applied to these entities.

  • McGrath Saleco Limited – fined $40,000 for failing to lodge four annual reports between 2017 and 2020;
  • Intelligent Capital Limited – fined $15,000 for failing to lodge financial reports between 2019 and 2021;
  • Monarca LMC Ltd – fined $18,000 for failing to lodge financial reports, failing to hold annual general meetings and failing to report to members between 2018 and 2020;
  • ADG Global Supply Limited – fined $5,000 for failing to lodge financial reports between 2017 and 2019;
  • Biosar Australia Pty Ltd – fined $3,500 for failing to lodge financial reports in 2018 and 2019; and
  • Lycamobile Pty Ltd – fined $9,000 for failing to lodge financial reports in 2018 and 2019.

 

Implications for Licensees

As the above examples show, ASIC can take action against companies that fail to comply with their financial reporting obligations.

Licensees should take the following steps to ensure their financial reporting obligations are met:

  • contact your auditor prior to the end of the financial year. This will allow you adequate time to prepare all the documents required for the audit process and lodgement of your financial statements with ASIC.
  • collate the documentation that needs to be submitted. It is important that you know and understand documentation that needs to be submitted to avoid late fees, potential breaches and other possible penalties.
  • review documents prior to submission and make sure your records are easily accessible.

 

If you have outstanding financial reports, get it touch with your auditor to have these documents lodged as soon as possible.

 

Background

Section 989B of the Corporations Act requires AFS licensees to prepare annual financial reports, including a profit and loss statement and balance sheet.

 

Further Reading

ASIC prosecutes fifteen companies for failing to lodge financial reports

Tips for ensuring your audit documents are prepared and submitted on time

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

 

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