ASIC has welcomed the announcement of a $3.8 million prior period write-off by ASX-listed, Terramin Australia Limited in its half-year financial report (ending 30 June 2014), relating to the exploration and evaluation assets of its Oued Amizour projects.

ASIC reviewed the company's 31 December 2013 financial report as part of its ongoing financial reporting surveillance program. As the company's exploration licence for the projects expired in August 2011, ASIC made inquiries as to the appropriateness of the company's subsequent recognition of $3.8 million of exploration and evaluation assets.

Accounting standard AASB 6 Exploration for and Evaluation of Mineral Resources (AASB 6) requires a company to have a current right to tenure of a mining area of interest in order to recognise an exploration and evaluation asset. The company has written off the $3.8 million as a prior period error because it was not able to demonstrate that all of the recognition requirements of AASB 6 were met.

Expense deferral remains a focus area of ASIC’s financial reporting surveillances (refer: 14-120MR). ASIC reminds those involved in preparing and approving financial reports to ensure that the criteria for recognition of assets are reassessed at each reporting period.