In the past two months, The Australian Securities & Investments Commission (ASIC) has been proactively contacting companies that qualify as ‘large’ under the requirements of the Corporations Act 2001. The purpose of ASIC’s correspondence is often to request audited financial statements from the relevant company in accordance with Part 2M of the Corporations Act requiring large companies to prepare and lodge audited financial statements on an annual basis.
Is your company ‘considered’ large’?
Under the Act, a company is considered large if it meets any two of the following criteria:
- The consolidated revenue for the financial year of the company and any entities it controls is $25 million or more.
- The value of the consolidated gross assets at the end of the financial year of the company and any entities it controls is $12.5 million or more.
- The company and any entities it controls have 50 or more employees at the end of the financial year.
We haven’t seen this sort of targeted communication from ASIC in recent years. This may be due to ASIC’s lack of information on the size of companies. However, with improvements in data matching software and sharing of information between government departments, ASIC may finally have the means to monitor companies’ reporting obligations.
A cloud with a silver lining
As a director of a large company, your first reaction may be annoyance at the additional compliance burdens posed by ASIC. ASIC guidelines do provide financial reporting and audit relief under extreme circumstances, but based on our experience, this grant of relief is rare.
Rather than seeing this as a cause of aggravation, directors should treat the need for an audit as an opportunity even though compliance and opportunity don’t often form a happy marriage. An audit does not need to be simply a compliance task. Find out more about the benefits of audit for all organisations in our article Don’t want an audit? Think again.
Any auditor who truly cares about their clients and their profession would ensure that every audit engagement achieves the dual purpose of compliance and value-add to their clients.
Accru auditors take great pride in ensuring every audit engagement is a valuable experience for clients. To find out more about how Accru can help you achieve your business goals and comply with ASIC requirements, contact one of our Audit team members.