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While directors have a wide range of responsibilities, these insights concentrate on their financial reporting responsibilities. Built on the CAANZ and ACCA’s report ‘Directors’ Responsibilities for Financial Reporting’, this article aims to help those charged with governance in understanding and fulfilling their financial reporting responsibilities.
Directors are collectively responsible for meeting their obligations in relation to financial reporting. Thus, every director needs to understand the financial information and the process involved in such information being presented. Though a media release by the Australian Securities and Investment Commission (ASIC) notes that ‘directors do not need to be accounting expert’, it is important to highlight that directors are not able to delegate their responsibilities for financial reporting. It is common, however, for directors to obtain external professional advice and information (including from accounting firms and audit committees) to assist them with fulfilling their responsibilities.
Directors’ responsibility for financial reporting arises from their ‘duty of care’ outlined in various legislative and other regulatory requirements such as the Corporation Act 2001, state/territory-based Association Incorporation Acts, Australian Charities and the Not-for-profits Commission Act 2012 etc.
While directors are not expected to be an accounting expert, they do need to have sufficient financial literacy to perform the following duties:
When the company is required to lodge its financial reports with ASIC, directors need to include the following declarations with their lodgement:
To successfully discharge their responsibilities, directors need to:
While it is not appropriate for directors to completely rely on the expertise of others (i.e. management and external auditors), they may benefit from consulting with accounting professionals for guidance and advice to understand the financial information.
While directors have a wide range of responsibilities, these insights concentrate on their financial reporting responsibilities. Built on the CAANZ and ACCA’s report ‘Directors’ Responsibilities for Financial Reporting’, this article aims to help those charged with governance in understanding and fulfilling their financial reporting responsibilities.
Directors are collectively responsible for meeting their obligations in relation to financial reporting. Thus, every director needs to understand the financial information and the process involved in such information being presented. Though a media release by the Australian Securities and Investment Commission (ASIC) notes that ‘directors do not need to be accounting expert’, it is important to highlight that directors are not able to delegate their responsibilities for financial reporting. It is common, however, for directors to obtain external professional advice and information (including from accounting firms and audit committees) to assist them with fulfilling their responsibilities.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to your circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
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