Regulator warns on annual reports The corporate regulator has warned Australia's biggest companies about its areas of focus for financial year reports. A review of 150 annual reports from late last year found deficiencies in key areas, including: the impairment of goodwill, non-consolidation of controlled entities, and key disclosures about "going concern" and the assumptions underlying asset valuations. Some companies had to make "material adjustments" to their annual reports as a consequence. These were the areas that would come under scrutiny this reporting season, the Australian Securities and Investments Commission warned. Companies with shadow banking activities, such as unlisted debenture issuers, will also be heavily scrutinised. This comes after a string of high-profile collapses in the troubled sector in recent years - and quick fire sales to avoid a collapse - involving companies such as Banksia Securities and Southern Finance. It also follows a warning from the International Monetary Fund in November that Australia needed to tighten its rules allowing non-bank lenders to offer banking services without any oversight from the banking regulator. ASIC said annual reports needed to be clearer about basic information. "We found instances where disclosures about the ability of entities to continue as a going concern were inadequate," the ASIC report says. In some cases entities were reliant on financial support from their parent but this fact had not been disclosed, even though such information can be important to users of the financial report. ASIC has also reminded directors that they ought to focus on the operating and financial review (OFR) section of their annual reports this season, following changes introduced in March. These sections must provide "meaningful" and "useful" information about the "underlying drivers" of the financial performance of companies, with a focus on the quality rather than the quantity of information, ASIC says.