Audit Threshold Changes – commencing 1 July 2019

By Tim Nesbitt - July 8, 2019

Further to recent coverage the audit thresholds amendment has been passed by the government and will come into effect from 1 July 2019. Your clients will doubtless be asking or wondering whether the change impacts them and or whether they will continue to require an audit.

While some of our clients may now fall below the threshold there are many reasons why an audit may still be necessary or desirable for our clients, refer the FAQs below for more information.

FAQs

What are the revised thresholds?

Revenue $50 million (on a consolidated basis)
Assets $25 million (on a consolidated basis)
Employees 100 Full time equivalent

Read more about the legislation here.

Does this mean I don’t need an audit for 30 June 2019?

No the threshold changes kick into place from 1 July 2019 for years commencing 1 July 2019 onwards.

What’s the first year I could benefit from the change?

A June year end client will apply the new thresholds to their 30 June 2020 Audit

A December year end client will apply the new thresholds to their 31 December 2020 Audit

If the company is no longer above the threshold will they have to apply for relief?

No. There is no change to the existing requirements entities below the threshold and meeting the requirements are relieved. Note, however, this does not remove the need to maintain books and records capable of being audited which is a requirement of the Corps Act. Refer - ASIC class order 2016/784 and and in ASIC's Regulatory Guide 115 - Audit relief for proprietary companies.

Has there been any change to how the numbers for the threshold are calculated?

No. The basis for determining the consolidated revenue, assets and employees remains the same, it is only the quantum which has changed. Read more here.

So, if my company is below the threshold I don’t need an audit?

Perhaps. From a statutory perspective this is true, however, many of our clients will have contractual or other reasons to have an audit including but not limited to:

  • Banking covenants
  • Group reporting
  • Ownership/Management’s desire to have an independent view of performance

Also, refer Nick Bull’s interview on the thresholds when they were proposed and the value of the audit.

How does this affect ACNC entities?

It does not their thresholds for audit or review remain the same and are available on the ACNC website.

How does this affect public unlisted entities?

It does not, as the thresholds are for proprietary companies.

How does this affect companies limited by guarantee?

It does not, as the thresholds are for proprietary companies.

How does this affect listed entities?

It does not, as the thresholds are for proprietary companies.

How does this affect foreign controlled small proprietary companies?

There is no change in the principles and rules applying to these entities other than the change to the applicable thresholds to determine if it is a small foreign controlled entity. Relief is obtained in the same way as previously referred to in ASIC's class order 2016/784 and in ASIC's Regulatory Guide 115 - Audit relief for proprietary companies.

 

If you require any assistance, please reach out to your Pitcher Partners expert.


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