- The thresholds for determining what constitutes a ‘large’ proprietary company have been doubled from 1 July 2019
- The application fee for consent from ASIC to resign as auditor of a public company has been reduced from $3,487 to $40 effective immediately
Chartered Accountants Australia New Zealand’s Reporting and Assurance Team has had a couple of recent successes with proactive advocacy.
Large proprietary company thresholds increased
The government has reduced the financial reporting burden for some proprietary companies by increasing the thresholds for determining what constitutes a large proprietary company under section 45A of the Corporations Act 2001.
Currently, companies that meet the thresholds are required to lodge annual audited financial reports, including a director’s report, with the Australian Securities and Investments Commission (ASIC). The thresholds have been doubled, so a proprietary company is now ‘large’ if it meets at least two of the following criteria:
- A$50m or more consolidated revenue for the financial year of the company and the entities it controls (up from A$25m)
- A$25m or more consolidated gross assets at the end of the financial year of the company and the entities it controls (up from A$12.5m)
- the company and the entities it controls having 100 employees at end of the financial year (up from 50).
We, along with CPA Australia, had written to the Treasury in October 2018 calling for a comprehensive review of the financial reporting thresholds. Treasury responded by consulting on draft regulations echoing our call to increase the threshold.
In our joint submission, we supported, in principle, an increase in the thresholds. Members had raised concerns about the excessive regulatory burden on smaller companies that fell within the ‘large’ proprietary company definition. They were largely of the view that a revision would bring these thresholds more into line with current levels of activity that indicate ‘economic significance’.
ASIC fees for auditor resignations reduced
The Government has reduced the ASIC application fees for auditors to resign from a public company, including companies limited by guarantee, to A$40 (form 342). Such auditor resignation fees were not included in the consultation on the ASIC industry funding model, and on 1 July 2018 the fee unexpectedly increased from A$39 to A$3,487.
As soon as members brought this to our attention, we wrote to Treasury asking for the fee to be urgently reconsidered. Assuming the cost is passed on to the client, members were concerned about the impact such a significant fee would have on smaller companies’ ability to appoint an auditor, especially companies limited by guarantee.
In January this year, Treasury issued exposure draft regulations that included our request to reduce the fee. In our submission, we reiterated our concerns over the fee being excessive and creating unintended consequences, and again expressed our support to reduce the fee.