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    Country by Country Financial Reporting and Auditing Framework

    Australia – Crowe Horwath Australia (prepared July 2013)

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    Preparation of and Filing of Statutory Financial Statements

    The following entities are required to prepare and lodge annual financial statements, either with the Australian Securities and Investments Commission ("ASIC") or with an industry regulator:

    • Listed Companies
    • Registered Managed Investment Schemes
    • Financial Institutions
    • Foreign-owned Subsidiaries
    • Large superannuation funds
    • Large privately owned companies, which are defined as those meeting at least two of the following criteria:
      • Consolidated gross assets greater than US$12.5m
      • Consolidated gross revenue greater than US$25m
      • More than 50 employees

    Certain government, Aboriginal, and not-for-profit entities are also required to prepare and lodge annual financial statements, although requirements vary between different states and territories.


    Financial Reporting Framework

    All Australian companies must comply with Australian Accounting Standards.  These are fully compliant with International Financial Reporting Standards (IFRS) and contain a small number of additional requirements specific to Australia.

    Australian IFRS standards apply to all financial statements.  There is no local GAAP, and the use of IFRS for SMEs is not permitted.

    A differential reporting framework operates for different types of entities.  Companies which are not listed or otherwise publicly accountable may be able to take advantage of the Reduced Disclosure Regime (RDR), or to prepare Special Purpose financial statements.  These options significantly reduces the volume of disclosures required when compared with full IFRS, but all the recognition and measurement requirements of accounting standards continue to apply.

    Companies are generally required to use 30 June as their year-end, although some exemptions are available.  In particular where the company is a subsidiary of a foreign-owned group, they are able to align their year-end with that of the parent entity.


    Audit Requirements for Corporations and LLPs Registered in Australia

    The entities listed above which are required to lodge financial statements are also required to have them audited and to lodge an audit report.


    Audit Exemption

    Small domestically owned proprietary companies which do not meet the size criteria are not usually required to have an audit unless requested to do so by over 5% of shareholders or by the corporate regulator - ASIC.


    Audit Appointment, Rotation and Joint Audits

    Audit appointments in Australia are not usually for a fixed period.  Clients have the right to remove their auditor, however, if doing so outside the Annual General Meeting, they must hold an Extraordinary General Meeting of shareholders.  Auditor resignations or removals must also be approved by ASIC.

    There is no requirement to rotate audit firms, but listed companies must rotate their audit and engagement quality control partners every five years.  Other public interest entities must rotate every seven years in line with the ethical standard.

    Joint audits are extremely rare in Australia.


    Auditing Standards

    All audit standards are undertaken under Australian Standards on Auditing (ASAs). These are fully compliant with the clarified International Standards on Auditing (ISAs) issued by the IAASB, as well as a small number of additional requirements specific to Australia.


    Ethical Framework

    Crowe Horwath Australia, and the Australian accounting profession, are bound by ethical standards issued by the Accounting Professional and Ethical Standards Board, including the Code of Ethics.  The Code of Ethics is fully compliant with the IFAC Code (IESBA), with some additional Australian local requirements.

    Australian auditors are also required to fully comply with ISQC 1 on quality control.   


    Auditor Registration

    Australian practitioners who wish to sign company audit reports must gain Registered Company Auditor ("RCA") status.  The requirements to gain this status are stringent, generally comprising either 3,000 hours of audit experience in the previous five years, or a detailed assessment of skills and qualifications by ASIC.

    Some specialist areas, such as superannuation funds or financial institutions, have their own additional requirements for auditor registration.


    Audit Regulation

    External Monitoring

    Crowe Horwath Australia is subject to external review by ASIC, which reviews all auditors of listed companies on a three year cycle.  Reports on individual firms are not publicly available, however ASIC's report on their inspection programme, summarising their findings across the profession as a whole, is available from their website.

    Both the Group, and individual Principals within Crowe Horwath Australia may be subject to review by professional bodies such as the ICAA or CPA Australia, in accordance with their standard inspection programme for professional practitioners.


    Internal Monitoring

    We have established a formal annual monitoring and peer review process which allows us to gain assurance that our firm's quality control systems are operating effectively.  The review consists of both reviews of individual audit files, and an assessment of compliance with the group's policies and procedures relating to independence and audit quality.  The files for review are selected using a risk-based approach with a weighting towards public interest entities, and other larger or more complex clients.  Every partner is subject to the review of at least one audit file every year. 


    Transparency Report

    All Australian audit firms with greater than 10 listed audit clients are required by law to publish a transparency report.  Crowe Horwath Australia's report is available from the firm's website.  Topics covered include:

    • Structure, Ownership and Governance
    • The Crowe Horwath International Network
    • Internal Quality Control
    • Independence and Ethics
    • External Regulation
    • Public Interest Entity Clients

    Contact Us
    David Chitty - Audit
    London, United Kingdom
    +44 20.7842.7292

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