Essential guidance for 2010 financial year end

As part of the Institute's ongoing analysis of themes impacting preparers, auditors and audit committee's as they perform their financial year end roles and professional responsibilities, we have uncovered three new issues as well as confirmed the continued presence of three existing themes in our latest Essential guidance for the 2009-10 financial year end

Despite improvement in Australia's business conditions, and the country avoiding Europe's sovereign debt risks, the challenges for the June 2010 financial year end reporting period continue to be - determining fair value, impairment of assets and going concern.

Looking forward the Institute anticipates increased fair value movement in financial instruments to continue as well as some reversals of impairments from prior years. An increase in the cost of capital, exchange rate fluctuations and more mergers and acquisitions are expected throughout the rest of 2010.

The continued volatility of the Australian dollar and some commodities place great pressure on corporate risk management and hedging strategies. Liquidity remains tight for businesses, therefore, careful forecasting of short to medium term finance needs is critical, as is clearly understanding the terms and conditions with bankers and financers.

It will be extremely interesting to witness how the Australian economy continues its path out of the global economic downturn and whether it can capitalise on its unique position.