ASIC updates Form FS 70 for AFS licensees

The Certification paragraph 11(a)(iii) of Form FS 70 Australian financial services licensee profit and loss and balance sheet requires an entity holding an Australian financial services (AFS) license to present consolidated financial statements, in addition to its own financial statements, when it has control of an investee. ‘Control’ is defined in AASB 10 Consolidated Financial Statements.

AASB 10, paragraph 4(a) provides an exemption for certain intermediate parent entities from preparing consolidated financial statements, providing certain criteria have been met. However, the ultimate parent entity in Australia (if not an investment entity) cannot be exempt from preparing consolidated financial statements if they are required by legislation to prepare financial statements in accordance with Australian Accounting Standards.

‘…a parent need not present consolidated financial statements if it meets all the following conditions:
  • it is a wholly-owned subsidiary or is a partially-owned subsidiary of another entity and all its other owners, including those not otherwise entitled to vote, have been informed about, and do not object to, the parent not presenting consolidated financial statements;
  • its debt or equity instruments are not traded in a public market (a domestic or foreign stock exchange or an over-the-counter market, including local and regional markets);
  • it did not file, nor is it in the process of filing, its financial statements with a securities commission or other regulatory organisation for the purpose of issuing any class of instruments in a public market; and
  • its ultimate or any intermediate parent produces financial statements that are available for public use and comply with IFRSs, in which subsidiaries are consolidated or are measured at fair value through profit or loss in accordance with this Standard…’

Extract from AASB 10, paragraph 4(a)

Our August 2022 newsletter noted that the Australian Securities and Investments Commission (ASIC) did not intend to override the exemption that applies under paragraph 4(a) of AASB 10.

ASIC has now amended Form FS 70 to clarify that consolidated financial statements need not be presented by intermediate parent entities if the exemption in AASB 10 applies.

Need assistance?

Please contact our IFRS & Corporate Reporting team if you would like further information, or if you require assistance with any AFS licensee financial reporting matters.