THE corporate regulator has warned that it will crack down on listed companies that provide selective or poor disclosure of their profit results in the coming annual reporting season.

The Australian Securities Investments Commission said yesterday it would focus specifically on segment reporting, in which profits are identified by geographic region or by type, reported The Australian.

It also said it would be looking in financial reports for material disclosures necessary for investors to understand the financial position and performance of a company.

“This includes key assumptions supporting asset values, sources of estimation uncertainty and information on difficult accounting policy choices,” ASIC commissioner Michael Dwyer said yesterday.

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His comments come after ASIC earlier this year warned listed companies against misleading investors by “cherry-picking” earnings figures.

ASIC said financial information that did not comply with statutory accounting standards “should only be used in exceptional circumstances”.

The crackdown comes as companies are facing further tax and legislative changes, including the move towards a carbon pricing mechanism, new pushes towards sustainability reporting, and other developments.

Investors are nervous of the looming profit season after a number of recently announced downgrades caused variously by the high dollar exchange rate, weak consumer confidence and the disruptions caused at the start of the June half by floods in Queensland and Victoria and, in March, the earthquake and tsunami disaster in Japan.

QBE Insurance, Suncorp and IAG were hit by flood and New Zealand earthquake claims while BlueScope Steel, OneSteel, Fairfax Media and Qantas have all sounded warnings about their short-term profitability.

ASIC recently finished a review of company reports for the half year to December 31.

It said a very low level of asset impairment had been reported for that period, and that concerns over the consolidation at pre-GFC prices of some recently acquired businesses meant those issues would be scrutinised in the coming reporting season.

Read more about ASIC’s crackdown on listed companies’ financial reports at The Australian