ASIC has welcomed the announcement of a $4.6 million impairment charge by ASX-listed, iProperty Group Limited relating to its Singapore business in its results for the half-year ended 30 June 2014.

ASIC reviewed the iProperty Group financial report for the year ended 31 December 2013 as part of its ongoing financial reporting surveillance program. Following inquiries of the company to understand its impairment testing methodology, ASIC questioned the recoverable amount of the Singapore business, and in particular, the iProperty Group’s use of fair value as a basis for estimating the recoverable value.

iProperty Group had applied AASB 13 Fair Value Measurement for the first time for the reporting period ended 31 December 2013. By estimating fair value, iProperty Group was required to apply that standard’s definition of fair value which requires entities to maximise the use of market-based inputs and assumptions.

The $4.6 million impairment charge in the half-year results reflects iProperty Group's conclusion that the comparable transactions it had previously relied upon to estimate fair value as at 31 December 2013 are less relevant as at 30 June 2014. As a result, the other basis under the accounting standards for estimating the recoverable amount of the Singapore business was applied (a value in use calculation).

As outlined in ASIC media release 14-141MR Findings from 31 December 2013 financial reports, impairment testing and asset values remain a focus area of our financial reporting surveillances. ASIC reminds companies and those involved in preparing and approving financial reports that in estimating the fair value of assets, they should have regard to the detailed principles of fair value when applying the requirements of the new standard.