As we are all seeing in the Australian media, it is now the reporting period following June 30, 2023. In response to a number of queries we have received, please see a summary of important considerations for entities preparing general-purpose financial reports and their audit requirements.
Large Private Sector Entities
In Australia, sizeable proprietary companies are obligated to prepare and lodge general-purpose financial reports and a directors’ report for each financial year. These accounts must be audited and submitted to ASIC. A company is considered ‘large’ if it meets at least two of these criteria during a financial year:
- Consolidated revenue for the company and its controlled entities is $50 million or more.
- Value of consolidated gross assets at year-end is $25 million or more.
- The company and its controlled entities have 100 or more employees at year-end.
Small proprietary companies might also need to file financial reports based on specific circumstances. For more information please see the ASIC website.
Updates to Financial Reporting for AFS Licensees by ASIC
Starting from financial years commencing on or after July 1, 2021, changes to accounting standards have altered the financial reporting requirements for Australian financial services (AFS) licensees that are for-profit companies, registered schemes, and disclosing entities under Chapter 2M of the Corporations Act 2001 (the Act). Entities not classified as reporting entities and lacking public accountability can no longer prepare special purpose financial reports (SPFRs) for ASIC. Instead, these entities can follow a simplified disclosure regime, while those with public accountability must adhere to full standards’ disclosure requirements.
All entities must apply complete recognition and measurement rules for assets, liabilities, income, and expenses.
Transitional provisions are in place for Chapter 2M licensees without public accountability, allowing them to delay new disclosure requirements by one year. For more information please see the ASIC website.
Annual Reporting for Not-for-Profit Companies
The ACNC requires not-for-profit charities to report annually based on their size: small, medium, or large. Size classification is determined by annual revenue for the reporting period, with different reporting requirements for each category:
- Small charities: Annual revenue under $500,000.
- Medium charities: Annual revenue of $500,000 or more but less than $3 million.
- Large charities: Annual revenue of $3 million or more.
All charities must submit an Annual Information Statement, and medium/large charities must also provide an annual financial report. The table from this link to the ACNC website summarises these reporting requirements based on the charity size.
We believe the information contained herein to be correct at the time of going to press, but we cannot accept any responsibility for any loss occasioned to any person as a result of action or refraining from action as a result of any item herein.
If you have any questions, don’t hesitate to consult our dedicated audit and financial reporting team.
Author: Irene Wang, Partner – Audit and Assurance at BYRONS.