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Welcome AASB 16 Check: Will my ‘SMALL’ proprie ary company become ‘large’? n PATRICIA STEBBENS AND MICHAEL VOOGT he new leases s andard requires en iies ha are lessees o recognise a righ -o -use asse or mos o heir leases. Tis could resul in a signi can s ep up in he value o asse s recognised on ransiion. Tis AASB 16 Check considers he impac o AASB 16 Leases on nancial repor ing obliga ions or proprie ary companies under he Corpora ions Ac 2001.
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Transition scenario Le ’s pose a scenario ha prior o he da e o ini ial applica ion o AASB 16, a company had 30 employees, revenues o $60 million, and o al asse s o $10 million. I was classi ed as a small proprie ary company under he Corpora ions Ac 2001, and did no have o prepare or have i s nancial s a emen s audi ed. Te company leases warehouse premises o s ore i s inven ories, and wo oors o an o ce building. On applying AASB 16, he company recognises righ -o -use asse s or bo h o hese leases. As a resul , o al asse s increase o $20 million. A he end o he nancial year, he company has o al asse s o $20 million, revenues o $70 million, and 30 employees. Ques ion: Given he increase in o al asse s on applica ion o AASB 16, does he company need o prepare nancial s a emen s or lodgemen wi h ASIC? In erpre ive response: I is highly likely. Te company now mee s he requiremen s o a large proprie ary company under he Corpora ions Ac . Te implica ion o his change in s a us is ha generally a large proprie ary company has nancial repor ing obliga ions under he Corpora ions Ac , including a requiremen o prepare and lodge audi ed nancial repor s wi h ASIC.
The implication of this change in status is that generally a large proprietary company has financial reporting obligations under the Corporations Act, including a requirement to prepare and lodge audited financial reports with ASIC.”
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- PATRICIA STEBBENS In technical speak A proprie ary company is classi ied as a large proprie ary company where any wo o he ollowing condi ions are me : • consolida ed revenue or he inancial year is ≥ A$25 million. • consolida ed gross asse value as a he end o he inancial year is ≥ A$12.5 million. • employees o he company and i s con rolled en i ies as a he end o he inancial year ≥ 50 employees. [Corpora ions Ac 2001, s45A] In November 2018 he Governmen proposed increasing hese hresholds. e er o our epor ing Upda e 18 U-004 Special purpose on li e-suppor ? or more de ail.
A small proprie ary company is no required o prepare nancial repor s unless i is oreign con rolled, shareholders direc i o do so, or ASIC reques s nancial repor s. [Corpora ions Ac 2001, s292(2)] I you would like o discuss he implemena ion o he new s andard or your organisaion, ge in ouch wi h David Pring on 9455 9996 or davidpring@kpmg.com.au. First published by Patricia Stebbens, Partner, KPMG Australia and Michael Voogt, KPMG Australia
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Digi al Trans orma ion is op o CEO agendas n ROB BAZZANI IGI AL rans orma ion is he number one priori y or Aus ralia’s mid-marke businesses in 2019, according o a survey by KPMG Aus ralia. Te dual challenges o innova ion and disrup ion ake second place, while he need o make heir businesses ruly cus omer- and ci izen-cen ric came hird in he lis o business challenges. In hird posi ion were concerns overregula ion. Tis covered bo h he sec orspeci c regula ions acing he nancial services indus ry and he broader challenges o harmonising business regula ion; cuting red ape; and concerns over he capaci y/ capabili y o Aus ralia’s regula ors. Te ine ec iveness o governmen o deal wi h hese issues was also a major gripe, wi h responden s no ing he upheavals bo h a ederal and s a e level ha have plagued he Aus ralian poli ical landscape and demons ra ing a lack o belie ha Aus ralia’s major par ies can work cohesively on na ional agenda i ems. Te second annual KPMG business repor , Keeping Us Up A Nigh , surveyed more han 220 C-sui e execu ives in bo h large and medium-sized businesses. Al hough responden s were asked o name heir op ve issues, recurring hemes cu across speci c concerns, indus ries and size o business. Te op 10 concerns or he mid-marke were: • Digi al rans orma ion. • Innova ion & Disrup ion. • Cus omer-cen rici y. • egula ion. • Poli ical Paralysis. • Cos compe i iveness. • Cybersecuri y & Da a privacy.
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• Public rus . • Big da a. • In ras ruc ure and liveable ci ies. For he mid-marke , he ocus on cus omer experience and expec a ions in an increasingly digi ized world, he need o be cos compe i ive in disrup ed marke s ha are also acing regula ory change, were clearly op o mind, par icularly as business leaders see litle ac ion rom governmen . For big business, public rus was a major issue, no doub uelled by he oyal Commission in o he Banks, as well as wellpublicised corpora e scandals. Te midmarke conversely placed he lack o public rus as number eigh in he poll, behind issues o cybersecuri y and da a privacy. We’re no surprised ha he mid-marke pu s worries abou digi al rans ormaion a he op o he lis . For he mid-marke ha can be ex remely challenging. Tere’s a lo a s ake: in he innova ion race, he winner usually akes all. However, rue rans orma ion should also include cul ure – ofen he poor cousin behind he more visible echnology inves men . Being cos compe i ive – wi h responden s ci ing he rising cos s o employers o energy, raw ma erials, axes and governmen charges and labour cos s, including wages – is a de ni e issue. Award and penal y ra es remain op o mind a he smaller end-o -business scale and con ribu e o uncer ain y. Tis is uelled by genuine unres on how Big Da a is being used, how ofen, by whom, as individuals grapple wi h a world in which in orma ion is shared, raded and po en ially misused. To learn more, please contact David Pring on 9455 9996 or davidpring@kpmg.com.au.
FIRST PUBLISHED BY ROB B AZZANI, NATIONAL M ANAGING P ARTNER, KPMG ENTERPRISE AUSTRALIA, IN INSIDE SMALL BUSINESS
For big business, public trust was a major issue, no doubt fuelled by the Royal Commission into the Banks, as well as well-publicised corporate scandals. The mid-market conversely placed the lack of public trust as number eight in the poll, behind issues of cybersecurity and data privacy.”
“ - ROB BAZZANI
WESTERN SYDNEY BUSINESS ACCESS MARCH 2019
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