ASIC Financial Reporting Threshold Changes
The Government has announced that it will be raising the ASIC financial reporting thresholds in a bid to save small and medium-sized business more than $300 million over the next four years.
The thresholds are to be doubled to:
- $50 million or more in consolidated revenue (was $25 million)
- $25 million or more in consolidated gross assets (was $12.5 million)
- 100 or more employees (was 50 employees)
A 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.
These increased thresholds above means 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 under the government’s proposal.
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.