Recent changes, which came into effect on 28 June 2010, may affect your company's financial reporting obligations with ASIC.
The changes were introduced by the Federal Government with the aim of reducing financial reporting requirements for Australian companies. These reforms also change what is required in financial reports lodged with ASIC for the financial year ending 30 June 2010 and following financial years.
The amendments to the Corporations Act are the new rules affecting Companies Limited by Guarantee. This is in line with the Government’s aim to simplify the reporting obligations for these entities.
One of the major changes is the introduction of a three-tiered reporting framework that will reduce the reporting requirements for certain companies limited by guarantee, which typically have a not-for-profit purpose. As shown in the diagram, it will commence to apply for financial year ending 30 June 2010.
|
Tier |
Revenue Threshold |
Reporting Obligations |
Corp’s Act Provisions |
|
1 |
Annual revenue <$250,000 and does not have deductible gift recipient status |
Exempt from preparing a financial report unless directed to do so by ASIC or by at least 5% of members |
Sections 45B, 292, 294A, 294B, 301 and 316A |
|
2 |
Annual revenue of: <$250,000 and deductible gift recipient status, or Between $250,000 and $1,000,000 regardless of deductible gift recipient status |
Must prepare a financial report: Must prepare a directors’ report, although less detailed than that required of other companies Need not have the financial report audited unless a Commonwealth company, or a subsidiary of a Commonwealth company or Commonwealth authority. If the company does not have the financial report audited, it must have the financial report reviewed Must give the financial report to any member who elects to receive it.
|
Sections 292, 298, 300B, 301, 316A |
|
3 |
Annual revenue of: <$1,000,000 regardless of deductible gift recipient status |
Must prepare a financial report Must prepare a directors’ report, although less detailed than that required of other companies Must have financial report audited Must give the financial report to any member who elects to receive it. |
Sections 292, 298, 300B, 301, 316A |
Other Important Legislative Changes:
Other changes to the regulatory framework include, but are not limited to:
- Replacing the profits test for paying dividends with a new test based on net assets
- Clarifying the circumstances in which a company can cancel its share capital
- Improving disclosure of non-financial information in the directors' report of companies limited by guarantee
- Replacing the requirement for parent entity financial statements with reduced disclosure
- Introducing a new statement of compliance with International Financial Reporting Standards in the directors' declaration
- Making new provisions for changing year-end dates.
Comment