All disclosing entities, public companies, large proprietary
companies and managed investment schemes are required by Section
292 of the Corporations Act (the Act) to have their annual
financial reports audited and lodged with ASIC.
A small proprietary company does not have to have its accounts
audited unless:
- It is a disclosing entity;
- It is controlled by a foreign company and its financial results
are not included in any consolidated accounts of the foreign
company lodged with ASIC; or
- It is required by ASIC to prepare audited financial reports.
Section 319 of the Act requires a disclosing entity or
registered scheme to lodge the financial reports within three
months of the end of the financial year. All other companies
must lodge their financial reports within four months of the end
of the financial year.
What classifies as a large proprietary company?
Section 45(A)3 defines a large proprietary company as follows:
"A proprietary company is a large proprietary company for a
financial year if it satisfies at least 2 of the following
paragraphs:
- The consolidated gross operating revenue for the financial year
of the company and the entities it controls (if any) is $10
million or more;
- The value of the consolidated gross assets at the end of the
financial year of the company and The entities it controls (if
any) is $5 million or more;
- The company and the entities it controls (if any) have
50 or more employees at the end of the financial year. "
Can I qualify for an exemption?
In limited circumstances, some companies are exempt from the
requirement to lodge financial reports.
For instance:
- If the company has already lodged financial reports with the
Stock Exchange
- If the company has been granted relief by ASIC from the
requirement to lodge financial reports
- If the company is foreign controlled but the foreign company
that is in charge is registered with ASIC as a foreign company
and lodges consolidated financial reports that include the
activities of the Australian company.
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To start with, make sure that your corporation keeps good
records for the whole year. If this is done from the beginning
of the year, the job of finishing the end of year reports is
much easier and quicker.
If your corporation has an accountant or bookkeeper as an
employee, then they would normally prepare some of the reports
or at least prepare the information that goes into the reports.
Generally, most corporations would use an external accountant to
assist them in preparing the final reports.
The Quinn Group can assist you in preparing your financial
reports and ensure they are in line with the obligations and
regulations instilled by ASIC.
What records must you make sure your company keeps?
You must see that the company keeps up-to-date financial records
that:
- Correctly record and explain its transactions (including any
transactions as a trustee), and
- Explain the company's financial position and performance.
Even the smallest company must have financial records so that:
- True and fair financial statements of the company can be
prepared if needed,
- Financial statements can be conveniently and properly audited if
necessary, and
- The company can obey the tax laws.
If your company is a 'small proprietary company' (as defined in
the Corporations Act 2001) it will generally not have to prepare
formal financial reports under the Corporations Act each year.
However, you must still keep financial records, and may need
financial reports for managing and measuring your company's
progress, tax purposes or raising finance.
Large proprietary companies and public companies - even
non-profit public companies - must prepare financial reports,
have them audited and lodge them with ASIC.
What are financial records?
Some basic financial records that accountants might expect a
company to keep:
- General ledger, recording all the company's transactions and
balances (revenues, expenses, assets, liabilities etc.) or
summarising transactions and balances detailed in other records
- Cash records - e.g. bank statements, deposit books, cheque
butts, petty cash records
- Debtor and sales records - e.g. a list of debtors and their
balances, delivery dockets, invoices and statements issued, a
list of all sales transactions
- Creditor and purchases records - e.g. purchase orders, invoices
and statements received and paid, unpaid invoices, a list of all
purchases, a list of all creditors and their balances
- Wages and superannuation records
- A register of property, plant and equipment showing transactions
and balances in relation to individual items
- Inventory records
- Investment records - e.g. contract notes, dividend or interest
notices, certificates
- Tax returns and calculations - e.g. income tax, group tax,
fringe benefits tax and GST returns and statements
- Deeds, contracts and agreements.
All Audit Solutions can give you professional advice if you have
any doubt about the content or type of financial records to
keep. The list above gives examples only, because the financial
records you need will vary from company to company.
You may keep some financial records electronically, but you must
be able to convert them into hard copy so that you can give them
to anyone entitled to inspect them. Make backup copies of
electronic records regularly, for example weekly or daily.
A company would also normally prepare the following statements
regularly (say, monthly) for management purposes, providing to
lenders etc:
- Statement of Financial Performance - a statement showing the
company's revenues and expenses and the profit or loss that
results from these items
- Statement of Financial Position - a statement showing the things
of value the company owns and the debts the company owes, and
- Statement of Cash Flows - a statement summarising cash inflows
and outflows.
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To meet all requirements of the Act, the corporation must send
their financial reports to ASIC within three months of the end
of the financial year. All other companies must lodge their
financial reports within four months of the end of the financial
year.
This includes the following financial reports:
- Statement of Financial Position (formerly called Balance Sheet)
- Statement of Financial Performance (formerly called Profit and
Loss Statement)
- Statement of Cash Flows
- Notes to Financial Statements (disclosure required by the
regulations, notes required by the accounting standards, and any
other information necessary to give a true and fair view)
- Director's declaration (that the financial statements comply
with accounting standards, give a true and fair view, there are
reasonable grounds to believe the company/scheme/entity will be
able to pay its debts, the financial statements have been made
in accordance with the Act)
- Director's report
- Auditor's report
The above reports will need to be lodged along with ASIC's Form
388 Copy of financial statements and reports.
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Your corporation may, in certain circumstances, be granted an
exemption from preparing and filing audited financial
statements. Refer to above section can I qualify for an
exemption.
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An auditor does not in any way become involved with the business
or other affairs of the corporation.
The Quinn Group has certified auditors within the firm and
conducts the audit in a streamlined process that simplifies your
effort needed in meeting your obligations. During an audit,
Quinns checks the records of the corporation to give the members
an opinion as to whether the financial reports are true and
fair. This helps the members to know what all the assets and
liabilities are, and what has happened to the money of the
corporation during the last twelve months.
Quinns then checks the financial records on a test basis and
gets other information about the corporation's assets and
liabilities. The auditor would normally check a sample of the
receipts and the payments.
Can my accountant be my Auditor?
An auditor must be independent of the company, therefore, a
person cannot be appointed as an auditor if they are:
- An officer or employee of the company or an associated company;
- A partner or employee of such a person, or a partnership of
which such as person is a partner
If your accountant does not fall into one of the above
categories and if he or she has a current audit-practicing
certificate issued by a recognised supervisory body, they may
act as the company's auditors. Michael Quinn is a registered
company auditor (registered by ASIC) and this allows Quinns to
assist corporations in ensuring their financial reports meet
ASIC's regulations as well as undertake the audit, making the
reporting process a simple step.
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Essentially, the auditor will need all the information that is
listed below. It is best if you have this information already
prepared, and then meet with the auditor before the auditor
starts any work.
The auditor will need:
- Receipts issued during the year
- Bank deposit book
- Cash book recording the receipts for the year
- Bank statements for the whole year for all bank accounts
- Cheque butts
- Cash book recording payments for the year
- File of invoices and other documents you have that support each
of the payments made. It is normally best to have this in a file
in the same order as the cheque butt numbers.
- Wages book
- Employee files that have the history of annual leave, long
service leave, and sick leave taken
- Group certificates and the Tax office end of year reconciliation
- Assets register, or details of all the assets that the
corporation bought or sold during the last twelve months
- Copy of the insurance policy documents and the insurance
invoices
- Lost of any debtors at June 30 (money owed to the corporation)
- List of any creditors at June 30 (money owed by the corporation
to another organisation or person for goods or services that had
not yet been paid for at June 30)
- Minutes of meetings of the Directors, special general meetings,
or annual meetings held in the last twelve months
There may be other records needed. Some of your records may also
be on your computer. You should check with Quinns as to exactly
what is needed.
Yes. However, there is nothing to stop you employing an auditor
for other purposes, such as keeping the books or compiling the
tax return, provided the auditor does not take part in the
management of the company. You should agree to an engagement
letter that sets out the auditor's duties.
At Quinns we can offer a range of services to streamline your
financial reporting. For instance, Quinns can prepare a
management report after an audit, listing all the minor faults
that were found even if they have been corrected.
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The auditor is required by the Act to examine and provide the
corporation with a report (to accompany the financial
statements) which states whether:
- The Directors and the corporation have complied with the Act and
the regulations and the constitution.
- The balance sheet and the income and expenditure statement are
based on proper accounts and records and are in agreement with
those accounts and records.
The Quinn Group has a specialist auditing division with the
experience and qualifications required to conduct and issue such
Audit Reports and can assist you preparing for your reporting
obligations. For more information complete our online enquiry
form and a consultant will contact you on the next business day.
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After the audit is finished and the reports are ready, the
Directors will need to call an annual general meeting of
members. At this meeting the members will approve the audited
financial statements and returns forming part of the Director's
report.
Once this is done, a copy of the audited financial statements, a
statement of declaration by the Director's and a report for the
year must be sent to ASIC.
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Our dedicated team can assist you with all your auditing
needs.
Complete
and submit the Express Enquiry form on the top right hand side
of this page and we will contact you to discuss your enquiry
or call us on 1300 QUINNS (1300 784 667) or on +61 2 9223
9166 to arrange an
appointment.
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