Your vision for bringing your business to Australia needs to be tempered by compliance requirements. One of the biggest concerns people have when contemplating doing business in Australia regards financial reporting.
Do I have to lodge financial reports for my Australian enterprise?
Which reports do I need to prepare, what do I need to disclose, and how do I lodge them? Will this information be available to the public?
There are statutory requirements for financial reporting in Australia as set out by the Corporations Act 2001. All businesses, regardless of size, must maintain accurate financial records that explain transactions, financial standing and performance. You must prepare financial reports to be audited, send the financial report, directors' report and auditor's report to members, present documents to your AGM, and lodge relevant documents with ASIC and/or ASX. Depending on your business, your reporting requirements may commonly necessitate an annual financial report, a half-year report, and a Director’s report, and necessary financial statements.
While financial records must be kept by all business, only certain companies need to produce an annual financial report and Director’s report. You’ll need to do so if you are a large proprietary companies (in other words, if your business has consolidated gross operating revenue of more than $25M, has consolidated gross assets of over $12.5M, or has 50 or more employees. This applies for financial years ending on or before 30 June 2019, but recently the rules have changed and the threshold has doubled. From financial years beginning on or after 1 July 2019, you'll only need to report as a large company if your business has consolidated gross operating revenue of more than $50M, has consolidated gross assets of over $25M, or has 100 or more employees). These reports are also required from public companies, registered schemes, and all disclosing entities incorporated or formed in Australia.
If you are a small proprietary company, then your reporting requirements are not so demanding. You will only need to provide such financial reports in Australia if you are controlled by a foreign company for all or part of the accounting period, and if your company’s profit or loss for the period is not covered by accounts of the foreign company lodged with ASIC. ASIC and shareholders who hold more than 5 percent of voting shares need to give your company direction as to how the reports can be prepared no later than 12 months after the end of the financial year for which you are reporting.
In the end, reporting is the Director’s responsibility. Directors must not only approve financial statements and reports, but also go beyond auditors and management and bring their own understanding of the company into the writing of the statements.
Depending on the nature of your company in Australia, there are number of different reports you may need to write, including
As you can see, while the onus of the responsibility for getting your reporting right rests on the shoulders of company directors, there is a great deal of specialist knowledge involved. In order to better understand the financial reporting requirements of your company when doing business in Australia you may benefit from considering the following:
Calibre Business Advisory has a very experienced audit team who has worked with a wide range of local and foreign businesses in Australia. We can not only manage the auditing work required to ensure your financial reporting is up to standard, but also guide company Directors through the processes they need to engage in so as to answer the above questions confidently.
Important Disclaimer: Readers should not act solely on the basis of the material on this page. Items herein are general comments only and do not constitute or convey advice. Legislation and proposals of legislation are also subject to constant change. We therefore recommend that formal advice be sought before acting in any of the areas. This news article is issued as a guide to the readers. Calibre Business Advisory Pty Ltd and its associated entities disclaims any losses that may be incurred as a result of the reader undertaking any action based on this article.
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