Treasury has recently released the Corporations Amendment (Corporate Reporting Reform) Bill 2010.  The purpose of the proposed reforms is to reduce red-tape, improve accountability and transparency of disclosures and refine the reporting framework. The key initiatives included in the proposed reforms include:
  • reporting exemptions and simplification for public companies limited by guarantee
  • reducing the reporting requirements of parent entity financial statements
  • amending the requirements for paying dividends
  • easing of restrictions on changing reporting periods
  • extending the disclosure requirements of listed registered schemes.

Differential reporting framework for public companies limited by guarantee

In recognition of the fact that the majority of public companies limited by guarantee operate in the not-for-profit sector, the proposals are intended to reduce the burden and associated costs of financial reporting by way of exemptions for smaller entities and streamlining aspects of reporting for others, at the same time continuing to service the information needs of users.

It is proposed that this will be achieved by introducing a three tier differential reporting framework as follows:

First tier
  • companies not having deductible gift recipient status and annual revenue of less than $250,000

Obligations
  • company will be exempt from all financial reporting requirements

Second tier
  • companies with annual revenue of less than $250,000 that are a deductible gift recipient; and
  • companies with annual revenue of greater than $250,000 but less than $1 million, irrespective of whether the company is a deductible gift recipient

Obligations
  • company must prepare a financial report and a streamlined directors’ report (rather than a full directors’ report)
  • can elect to have the financial report reviewed rather than audited

Third tier
  • companies with annual revenue of $1 million or more, irrespective of whether the company is a deductible gift recipient.

Obligations
  • company must prepare a financial report and a streamlined directors’ report (rather than a full directors’ report)
  • financial report must be audited

Second tier financial report reviews

Public companies limited by guarantee falling into the second tier would have the option of having their financial report subject to a review rather than an audit.  This is intended to reduce the time and costs associated with an audit whilst still providing a level of assurance considered appropriate.

It is intended to extend the list of persons capable of conducting a review (from solely registered company auditors) to include members of a professional accounting body (ICAA, CPA, or NIA) that hold a prescribed practising certificate.