Subsidiaries in corporate groups will be better able to avoid costly financial reporting and auditing obligations under new rule changes announced by Australia’s corporate watchdog yesterday.
The Australian Securities and Investment Commission has amended class order 98/1418 under which some subsidiaries can apply to be exempt from reporting and auditing requirements where the consolidated accounts for the whole group are lodged.
ASIC has removed the requirement for subsidiaries to have a three year history of compliance with financial reporting requirements in order to qualify for the exemption.
That will mean quicker access to the exemption for qualifying businesses. And there will be less red-tape associated with applying for the exemption, with companies only required to lodge a one-off application instead of a new application each year.
The procedure for lodging cross-deeds of guarantee between companies in a group – a pre-requisite for qualifying for the exemption – has also been simplified.
Companies that are able to take advantage of the exemption could save thousands of dollars per exempt subsidiary, according to MGI Boyd Accountants principal and Sue Prestney.
“It is expensive for large proprietary companies to have each individual company audited and prepare accounts to lodge with ASIC,” Prestney says. “This could make it more cost effective to prepare consolidated accounts for businesses that qualify.”
Proprietary companies that satisfy two of three thresholds – annual revenue of $25 million, $12.5 million in gross assets or more than 50 employees – are generally required to lodge financial records with ASIC.