ASIC notes the decision by The Environmental Group Limited (Environmental Group) to amend the accounting for its acquisitions of RCR Energy Services and Baltec East during the year ended 30 June 2019. Acquisition costs of $313,358 previously recorded in goodwill have been expensed.

ASIC made enquiries about the lack of business combination disclosures in Environmental Group’s financial report for the year ended 30 June 2019. Environmental Group issued its amended financial report on 29 November 2019.

As outlined in ASIC media release 19-341MR Financial reporting focuses for 31 December 2019, asset values remain focus areas for financial reporting at 31 December 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 also apply appropriate experience and expertise to financial reporting, including complex accounting areas such as accounting for business combinations.