Contributed by Vicca Chartered Accountants, Australia www.viccaca.com
All Small foreign-controlled companies, unlisted public companies and large proprietary companies (including grandfathered companies) will no longer be able to lodge minimis ‘Special Purpose Financial Statements’ (SPFS) giving the reader in the public domain little to no knowledge of the underlying transactions that make up the trading capacity of the company and its controlled subsidiaries. These changes will be effective from 1 July 2021 (i.e. the financial accounts for the year ended 30 June 2022 lodged with the ASIC).
To determine if you are affected by the new financial accounts reporting standard please read the below summary.
New General Purpose Financial Accounts (GPFS) Rules from 1 July 2021
i.e. ASIC Lodged Financial Accounts for year ended 2022
From 1 July 2021, the ‘for-profit private sector entities’ listed below (see ‘Who is affected?’) will no longer be able to self-assess financial reporting requirements and prepare ‘Special Purpose Financial Statements’ (SPFS).
Who is affected?
For-profit companies preparing financial statements under the Corporations Act 2001, principally:
* Large proprietary companies** (including grandfathered companies);
* Unlisted public companies;
* Small foreign-controlled companies;
* Financial services licensees; and
* Small proprietary companies with crowd-sourced funding.
**What is a large proprietary company?
A proprietary company is defined as 'large' for a financial year if it satisfies at least two of the below criteria:
* the consolidated revenue for the financial year of the company and any entities it controls is $50 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 $25 million or more, and
* the company and any entities it controls have 100 or more employees at the end of the financial year.
Link to the amendments to the Accounting Standards:
The categorisation under which the above entities will report to the ASIC is Tier 2 General Purpose Financial Statements (TIER 2 GPFS)
We strongly recommend effected entities consider the below questions and understand:
1. What changes if any the TIER 2 GPFS requirements will have on a day to day operational level
2. Understanding what the TIER 2 GPFS accounts lodged with the ASIC will provide to a party searching the financial performance of the entity,
3. What are the variables the owners of the entity may consider detrimental if able to be viewed in the public domain,
4. What options can management institute to achieve an acceptable outcome with TIER 2 GPFS compliance.