December 2021 saw a return to the normal financial reporting deadline, with the month extension for COVID-19 no longer being available for most of HLB Mann Judd’s clients.

The reinstated deadline, at a time when Western Australia faced its first wave of COVID-19, caused some concern.

The shortage of accounting professionals in the industry, and of audit professionals in practice, put further strain on the audit profession. Border closures and skills shortages throughout the pandemic period continue to have a flow-on effect in relation to the quality, quantity and timeliness of information provided by internal accounting staff to their auditors.

At the same time, the auditing profession is facing an unprecedented demand for its services. The strength of the local share market coupled with high commodity prices, in particular gold, copper, and lithium, has led to many new entities seeking to list on the ASX via an IPO.

Additionally, some of HLB Mann Judd’s clients have spun off projects into new companies. Many of our established exploration entities have transitioned from the exploration phase to developing their projects for mining, which has increased auditing requirements.

In the last few years, the regulatory requirements for clients and auditors have increased. The new estimates auditing standard requires auditors to obtain greater levels of evidence; the ASX now requires auditors to compare our client’s statutory cashflows to their quarterly cash flow reports for material errors; and ASIC expects the company’s business model, strategies, key drivers of performance, future prospects, and business risks to be discussed in the operating and financial review (‘OFR’) section in their annual report.

For the upcoming reporting period, companies should engage with their auditors early, particularly if they have a transaction planned, or have identified a financial reporting issue. The sooner auditors can review and assess the issue and make an informed view, the sooner it’s likely to be resolved.

This article was first published in the Winter 2022 issue of Financial Times.