Large Proprietary Companies
In accordance with the requirements of the Corporations Act 2001, large proprietary companies must be audited every year. A large proprietary company is defined as a company that meets two of the following three criteria:
- the consolidated revenue for the financial year of the company and any entities it controls is $25 million or more
- the value of the consolidated gross assets at the end of the financial year of the company and any entities it controls is $12.5 million or more, and
- the company and any entities it controls have 50 or more employees at the end of the financial year.
The definition of a large proprietary company includes companies that it controls, and all too frequently this is overlooked. Resulting in potentially significant penalties and other additional costs.
If your company is getting close to reaching the threshold of becoming a large proprietary company, you may consider engaging an auditor in an earlier year to assist in identifying any issues, so they can be addressed before the requirement of an audit becomes mandatory. We have often found that in the first year that a proprietary company requests an audit, many issues arise, including sometimes that audits were required and not submitted for multiple prior years.
Other audit requirements
In some instances other proprietary companies may require an audit, for instance where they are controlled by a foreign company, or at the request of the bank providing finance. Audits can also be used by business owners to provide third party assurance that their accounts are being recorded correctly; which can be especially useful where you may only have a small accounting staff.
We audit many proprietary companies every year, and would be pleased to discuss your audit requirements with you.