ASIC notes the decision by Eco Energy Group Limited (Eco Energy) to devalue its intellectual property assets by $49.6 million as a prior period error in its financial report for the year ended 30 June 2019.

ASIC had raised concerns about the value of the assets in the financial report for the year ended 30 June 2018 because the assets had been revalued in the absence of an active market from which a fair value could be obtained.

As outlined in ASIC media release 19-143MR Major financial reporting changes and other focuses,  impairment testing and asset values remain focus areas for financial reporting.

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

Companies should apply appropriate experience and expertise to financial reporting, and to the processes and analyses supporting the information in their financial reports. This is particularly important for potentially complex accounting treatments.