Changes to the ASIC Financial Reporting Threshold
In a bid to improve conditions for small and medium-sized businesses, The Australian Government has announced that it will be doubling the ASIC financial reporting thresholds. It is estimated that this change will save small and medium-sized businesses $300 million over the next four years.
The reporting thresholds will be doubled to:
- $50 million or more in consolidated revenue (previously $25 million)
- $25 million or more in consolidated gross assets (previously $12.5 million)
- 100 or more employees (previously 50 employees)
A proprietary company that meets two of the above tests is classified as a “large” company and is required to comply with the financial reporting requirements (ie. public disclosure and public access of its accounts with ASIC) as well as the annual audit requirements.
Savings for more than 2,000 Australian companies
These increased thresholds mean that about a third (2,200) of the of the current large proprietary companies (6,600) will no longer be required to comply with financial reporting and audit requirements including lodging financial, directors and auditors reports with the corporate regulator.
According to Josh Frydenberg, “This is estimated to reduce the regulatory cost on these business by $81.3 million annually as the average cost of preparing and auditing financial reports is approximately $36,950 per company per year”.
It is understood that the Chartered Accountants Australia & New Zealand (CAANZ) and CPA Australia made a joint submission to the Treasury back in October calling for a comprehensive review of the financial reporting thresholds as part of the Australian Accounting Standards Board’s (AASB) work on the conceptual framework and special purpose financial reports.
Read the media release from the Treasurer.
This is great news for many of our clients who will welcome the increased thresholds removing them from the financial reporting and audit requirements.
Please contact us if you would like any assistance or guidance with these new rules on your company.