ASIC notes the decision by PS&C Limited [ASX code: PSZ] to impair goodwill by $50 million in its financial report for year ended 30 June 2019.

ASIC had raised concerns on PS&C’s impairment assessment of the goodwill as at 30 June 2018. ASIC questioned the reasonableness and supportability of free cash flow forecasts used in goodwill impairment testing, having regard to historical performance and market conditions. 

As outlined in ASIC media release 19-143MR Major financial reporting changes and other focuses, impairment testing and asset values remain a focus area for financial reporting at 30 June 2019.

Directors are primarily responsible for the quality of an entity’s financial report. This includes ensuring that management produces quality financial information on a timely basis. Companies must have appropriate processes, records and analysis to support information in the financial report.

Companies should apply appropriate experience and expertise, particularly in more difficult and complex areas such as accounting estimates including impairment of non-financial assets.