AASB-AUASB Joint Research Report: Australian Listed Entities: Recognised intangible assets and key audit matters

Thursday, May 11, 2023

The AASB-AUASB published a joint research report (with Professor Matthew Pinnuck and Dr Mark Willis) that aims to understand the significance of recognised intangible assets on the balance sheets of Australian listed entities.

This Report explores the frequency, magnitude and nature of intangible assets recognised by the Australian Securities Exchange (ASX) listed entities on their balance sheets. This Report also identifies the frequency of key audit matters (KAMs) related to intangible assets in auditor’s reports to provide insights into the areas that auditors are focusing on, possibly due to the complexity of the accounting requirements.

Through a review of the financial statements from 2010 to 2021, this Report finds that:

• with the exception of micro-mining entities, the majority of Australian entities recognised some intangible assets on their balance sheets;
• the level of investment in intangibles for the majority of entities, as a percentage of total assets, is relatively low. However, there are some entities that recognised a significant level of intangibles as a percentage of total assets;
• there is a wide variety of category descriptions used to present intangible assets, possibly impeding both comparability and a precise understanding of the nature of the intangible asset;
• intangibles are the most frequent KAM subject matter, suggesting a substantial fraction of auditors' resources to assure such information, despite the relatively low level of recognised intangibles.