ASIC notes the decision by Botai Technology Limited (Botai), formerly known as Wonhe Multimedia Commerce Ltd, to impair its trade receivables by $6.4 million.
ASIC had raised concerns about the impairment assessment for trade receivables at 31 December 2018. Botai was required to allow for expected credit losses under a new accounting standard. Botai has announced that it will recognise the $6.4 million of expected credit losses in the comparative financial information for the year ended 31 December 2018 appearing in its financial report for the half year ending 30 June 2019.
As outlined in ASIC media release 19-143MR Major financial reporting changes and other focuses, the application of the new financial instruments standard remains a focus area for financial reporting at 30 June 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 apply appropriate experience and expertise, particularly in more difficult and complex areas such as accounting estimates including impairment of non-financial assets.
Published by Australian Securities & Investments Commission. Reproduced with permission.