b'ESV 15Doing business in AustraliaFinancial reporting Small proprietary company not controlled by a foreign corporation& audit For small proprietary companies controlled by shareholders other than a foreign corporation, an audited financial report is required if the company received a request to lodge an audited financial report from more than 5% of shareholders or ASIC.In Australia, financial reporting requirements determined by the size and type of company. Annual reports areSmall proprietary company controlled by a foreign corporationrequired to be prepared for audit of the following entities:If the parent company lodges consolidated financial reports with ASIC and the subsidiary is party to a cross guarantee, then no financial reports need to be lodged.Public companies (listed and unlisted)If the company is a small proprietary company and not part of a large Australian group, then an application Large proprietary companiescan be made to exempt the small company from lodgement of an audited financial report.Small foreign controlled proprietary companiesFinancial reports can take the form of either General Purpose or Special Purpose Financial Statements. General Purpose Financial Statements must be prepared for reporting entities requiring the application of all accountingTiers of reportingstandards. (There are Tier 1 (full disclosure) and Tier 2 (reduced disclosure) variations). There are three frameworks of financial reporting in Australia:Non-reporting entities preparing Special Purpose Financial Statements are only required to apply the measurement1.Tier 1 General Purpose Financial Statements (GPFS). The reporting under this framework requires extensive disclosures principlesof the accounting standards resulting in significantly less disclosure. under the Australian Accounting Standards.The application of auditing standards carries the force of law in Australia and auditors must be registered with ASIC.2.Tier 2 General Purpose Financial StatementsReduced Disclosure Requirements. Under this framework, there are ESV has partners who are registered company auditors in Australia. substantially reduced disclosure requirements. An entity applying Tier 2 may elect to comply with additional Tier 1 requirements. Registered foreign company Public company 3.Special Purpose Financial Statements (SPFS). These are financial statements other than GPFS. SPFS can be prepared A registered foreign company is required to lodge auditedAn audit is required for both listed and unlisted publicin instances where an entity is required to prepare financial statements under the Corporations Act. Alternatively, financial reports with ASIC at least once every calendar yearcompanies. SPFS may be prepared for non-Corporations Act purposes. The disclosures required under this framework are further as well as at intervals of no more than 15 months. reduced compared to Tier 2 reporting.Large proprietary company Tier 1 Tier 2/SPFSGenerally, a large proprietary company* is required to prepare and lodge with ASIC audited financial statements. Exceptions toFor-profit Public accountability (e.g. entities listed Non-public accountabilitylodge financial reports with ASIC maybe available even though an audit may still be required. on the stock exchange)One exception is available for large subsidiaries that are part of a group with a common Australian holding company. Where each group company enters into a cross guarantee and the parent lodges a consolidated report, subsidiaries need not lodgeGeneral purpose financial statements for significant global entitiesindividual accounts.Under the Australian Tax Administration Act, a significant global entity (SGE) is required to lodge a general-purpose financial statement (GPFS) with the Australian Tax Office (ATO) in specific circumstances. This requirement applies in addition to any CONDITION VALUE AT PERIOD END reporting obligation under the Corporations Act.Consolidated revenue for the financial of the company and the entities it controls $50 million or moreValue of the consolidated gross assets at the end of the financial year of the company$25 million or more This means that, unless an SGEis otherwise preparing GPFS to lodge with the Australian Securities and Investments and the entities it controls Commission (ASIC), the entity will be required to lodge GPFS with the ATO.Number of employees of the company and the entities it controls at the end of the100 or more A significant global entity is one whose consolidated income of the global parent entity or the entity itself is great thanfinancial year AUD$1 billion.*To be considered a large proprietary company, the company must pass 2 of the 3 following tests: revenue is greater than$50 million, total assets is greater than $25 million, and greater than 100 full- time employees. Passing 2 of 3 tests makes your company large.'