Do you still need to have your accounts audited and lodged with ASIC?
Do you or your clients have SME businesses who annually prepare and lodge with ASIC audited financial reports? Going forward, they may not need to. This means cost savings and keeping financials private.
Changes to the reporting and audit requirements for Pty Ltd companies under the Corporations Act 2001 (Cth) became effective on 1 July 2019, under the Corporations Amendment (Proprietary Company Thresholds) Regulations 2019.
The revenue, asset and employee thresholds that determine whether a Pty Ltd company is considered “large” (and therefore subject to requirements to prepare and lodge an annual financial report, a director’s report and an auditor’s report with ASIC each financial year) have doubled.
Under the new threshold, a company will be a “large” Pty Ltd company for a financial year if it satisfies at least 2 out of 3 of the following:
1. REVENUE THRESHOLD: the consolidated revenue for the financial year of the company and any entities it controls is $50 million or more (formerly $25 million or more);
2. ASSETS THRESHOLD: the value of the consolidated gross assets at the end of the financial year of the company and the entities it controls is $25 million or more (formerly $12.5 million or more); and
3.EMPLOYEES THRESHOLD: the company and any entities it controls have 100 employees or more at the end of the financial year (formerly 50 employees)..
According to the Australian Government, approximately one third of proprietary companies that lodged audited financial reports with ASIC for the 2017-18 financial year will no longer be required to lodge financial reports under the increased thresholds.
The increases to the proprietary company thresholds apply in relation to financial years beginning on or after 1 July 2019.
It is worth noting that the thresholds for determining “small” public companies limited by guarantee (who are exempt from the annual obligation to prepare and lodge a financial report and directors report with ASIC) have not changed and remain at $250,000 of consolidated revenue (and only applies to those companies limited by guarantee without DGR status).
Remember, these changes do not affect the obligation on all companies to keep correct written financial records that would enable true and fair financial statements to be prepared and audited (s286 Corporations Act). This includes the obligations to ensure a company’s records are complete and accurate by adopting appropriate accounting policies and designing and implementing appropriate controls and processes.