What are Audit Obligations for Private Companies?
Under the Corporations Act, Private Companies are obligated to undergo audits when:
- Consolidated revenue for the financial year of controlled entities is $25 Million, or any other amount prescribed by the regulations for these purposes.
- The value of the consolidated gross assets at the end of the financial year is $12.5 Million or more.
- The company and its entities have 50 or more employees at the end of the financial year.
- If two out of three rules are met, an audit is required under Corporations Act 2001. Or, if 5% of the shareholders request an audit.
How Audits Can Benefit Your Company
All private entities can benefit from an audit. It is a good opportunity to look inward, and also head off any irregularities and discrepancies. It is the auditor’s responsibility to spot the issues and advise a company on the best solution. If an audit proves to be problem free, it has a positive effect on management who can proceed with their vision knowing for certain the condition of their enterprise. The point of an audit is to establish a strong base of ample knowledge and confirmed facts, rather than leave anything to guesswork.
Private companies usually have close relationships between stakeholders and board members. A diverse group of people with different specialties and expertise must have access to reports that shed light on many facets of the business. Members must be able to rely on a report for big strategy decisions or risk assessments. An impartial, independent external audit report showing the strengths and weaknesses of the processes and protocols increases trust in the financial reports.
Assist in Strengthening Loan Applications
Banks are increasingly hesitant to loan capital to small and medium businesses. Requirements such as hard securities, consistent income and profit figures mean that the chances of receiving favourable loan rates is low. A comprehensive and multi-faceted external audit shows transparency and could well mean the difference between a loan rejection or approval.
To Obtain Grants or Further Investment
Companies applying for government grants or new investment would greatly benefit from in-depth audits. Government grants follow strict regulations and financial statements are closely scrutinised before decisions can be made. Building confidence in potential investors is important when trying to further a conversation about business capital. In such situations, a timely audit with well-written reports can signal a proactive attitude and transparency in the relationship.
Tax, Payroll and Systems Audit Services
Brown Auditing Services is more than just an auditing company. We consider ourselves as a critical line of defence for your business when assessing risks. With over 15 years of combined experience, our team excels in the development and utilisation of risk driven audits, tax and business audits and other assurance requirements. Contact us today to learn how we can transform your business.