The government in late November detailed plans to reduce the number of businesses that need to comply with financial reporting obligations.
Currently, businesses need to comply if they meet at least two of three thresholds for any given financial year:
- a minimum of $25 million in consolidated revenue;
- a minimum of $12.5 million in consolidated gross assets; and
- at least 50 employees.
With the changes proposed from the 1st July 2019 these thresholds will be lifted to a minimum of $50 million in consolidated revenue, a minimum of $25 million in consolidated gross assets, and at least 100 employees.
The great news is that these changes will exempt one-third of business (2,200 out of approximately 6,600) from their financial reporting and audit requirements with the Australian Securities and Investments Commission (ASIC).
These businesses will save an estimated $81.3 million per year as a result, as it costs an average of $36,950 per business per year to prepare and audit financial reports, according to the government.
Small businesses are still legally required to keep written financial records, and may need to prepare or audit financial reports if directed by either ASIC or 5 per cent or more of their shareholders.