Question 1

What are ASA standards and how do they relate to AUASB?

Accepted Answer

Australian Auditing Standards (ASA) are issued by the Auditing and Assurance Standards Board (AUASB) and published in the AUASB Standards. ASA are converged with International Standards on Auditing (ISA) — meaning Australian audit methodology, documentation, and reporting align with global practice. All statutory audits of Australian entities must be conducted under ASA by registered company auditors who comply with APES 110 — the Code of Ethics for Professional Accountants.

Question 2

When is an Australian private company legally required to have a statutory audit?

Accepted Answer

Small proprietary companies may be exempt from audit under section 292 of the Corporations Act 2001 if members pass the required resolution and the company is not a large proprietary company, disclosing entity, or otherwise required to audit. Large proprietary companies — meeting two of three thresholds ($50 million revenue, $25 million gross assets, 100 employees) — must have their financial reports audited under Part 2M.3. Public companies, disclosing entities, and companies bound by loan covenants or shareholder agreements may still require audits regardless of the section 292 exemption.

Question 3

How can we reduce our external audit fees?

Accepted Answer

The biggest cost driver is auditor time spent waiting for incomplete PBC schedules. We prepare indexed working papers, reconciled trial balances, and draft AASB footnote disclosures before fieldwork begins — reducing repeat requests and testing exceptions. Clean books maintained throughout the year also significantly lower audit hours compared to year-end reconstruction.

Question 4

What are the large proprietary company thresholds in Australia?

Accepted Answer

A proprietary company is classified as large if it meets at least two of three criteria at financial year-end: consolidated revenue of $50 million or more, consolidated gross assets of $25 million or more, or 100 or more employees. Large proprietary companies must have their financial reports audited under Part 2M.3 of the Corporations Act 2001 — the section 292 small company audit exemption does not apply.

Question 5

Can a large proprietary company avoid a statutory audit?

Accepted Answer

No. The section 292 exemption from audit is available only to small proprietary companies that meet the small proprietary company definition and pass the required member resolution. Large proprietary companies must appoint a registered company auditor and lodge audited financial reports with ASIC. Lenders and investors may impose additional assurance requirements beyond statutory minimums.

Question 6

When must large proprietary company financial reports be lodged with ASIC?

Accepted Answer

Audited financial reports for large proprietary companies must be lodged with ASIC within four months after the end of the financial year, together with the directors' report and auditor's report. Late lodgement attracts ASIC penalties. We coordinate audit fieldwork timelines to ensure the registered company auditor can sign before the lodgement deadline.

Question 7

How is internal audit different from a statutory financial statement audit?

Accepted Answer

Internal audit is conducted by or on behalf of the organisation to improve operations and controls — it does not provide an opinion on financial statements. Statutory audits are performed by external registered company auditors under ASA and result in an opinion on whether AASB accounts are fairly presented. Internal audit findings help you prepare for ASA fieldwork and satisfy board governance expectations under the Corporations Act 2001.

Question 8

Does my Australian company need internal audit if we are not public?

Accepted Answer

Public companies, APRA-regulated entities, and ASX-listed firms often require formal internal audit functions. Private companies — including large proprietary companies subject to Part 2M.3 audit requirements — benefit significantly from internal audit when preparing for ASA audits, lender due diligence, ATO examinations, or rapid growth that outpaces control design. Identifying weaknesses internally is far less costly than discovering them during an external audit or ATO review.

Question 9

What framework do Australian internal audits follow?

Accepted Answer

Australian internal audit functions typically align with the Institute of Internal Auditors' Global Internal Audit Standards and the Three Lines Model. These frameworks complement ASA requirements issued by the AUASB and are recognised by external auditors when evaluating whether management maintains effective internal controls over financial reporting.

Question 10

What triggers an ATO audit of my business?

Accepted Answer

Common triggers include large R&D tax incentive claims relative to revenue, BAS inconsistencies, related-party transactions and transfer pricing, repeated losses on company tax returns, mismatches between payment summaries and reported income, and risk-based selection through ATO data matching and analytics. Discrepancies between audited financial statements and company tax return reconciliations also identify review targets.

Question 11

What is the difference between an ATO audit and a financial statement audit?

Accepted Answer

A financial statement audit under ASA evaluates whether AASB financial statements are fairly presented — performed by an independent registered company auditor. An ATO audit evaluates whether your tax return complies with taxation law — performed by the Australian Taxation Office. The two can examine the same transactions but apply different standards and serve different purposes.

Question 12

Can penalties from an ATO audit be reduced or remitted?

Accepted Answer

Yes. The ATO may remit administrative penalties and general interest charge in appropriate circumstances under the Taxation Administration Act 1953. Voluntary disclosures before ATO contact may reduce penalties. We evaluate remission options and prepare submissions for every amended assessment that includes penalties or interest charges.

Question 13

Who can audit a self-managed super fund in Australia?

Accepted Answer

SMSF audits must be performed by an approved SMSF auditor registered with ASIC. Approved SMSF auditors are independent of the fund and its trustees — they cannot be fund members, related parties, or the fund's accountant in most circumstances. The auditor issues an independent auditor's report covering financial statements and regulatory compliance under the SIS Act.

Question 14

What does SMSF grandfathering mean for audit purposes?

Accepted Answer

SMSF grandfathering refers to transitional provisions allowing certain arrangements — such as pre-1999 in-house assets or legacy investments — to continue under specific conditions despite current SIS Act restrictions. Approved SMSF auditors must verify that grandfathered arrangements still meet ongoing compliance requirements. We document grandfathering eligibility and continuing conditions so auditors can assess compliance accurately.

Question 15

When is the SMSF audit due?

Accepted Answer

The SMSF annual return — including the independent auditor's report — is generally due by 31 October following the end of the financial year, or later if the fund has a registered tax agent lodgement extension. The audit must be completed before the annual return is lodged. We coordinate audit timelines to meet ATO deadlines and avoid late lodgement penalties.

Question 16

When does an ACNC-registered charity need an audit versus a review?

Accepted Answer

Large charities with annual revenue of $1 million or more must obtain an audit. Medium charities with annual revenue between $250,000 and $999,999 must obtain a review or audit. Small charities below $250,000 are generally not required to submit audited or reviewed financial reports unless their governing documents, state legislation, or major funders require it.

Question 17

What is the ACNC Annual Information Statement?

Accepted Answer

The ACNC Annual Information Statement is lodged annually by registered charities reporting activities, governance, and financial information. It is due six months after the charity's reporting period end. Medium and large charities must also submit audited or reviewed financial reports. Late or incomplete reporting can trigger ACNC compliance action.

Question 18

What accounting standards apply to Australian not-for-profit organisations?

Accepted Answer

Not-for-profit organisations follow applicable AASB standards including AASB 1058 Income of Not-for-Profit Entities and AASB 1059 for donations and grants. Registered charities must also comply with ACNC governance standards and reporting requirements. We prepare accounts under the applicable framework with fund accounting for restricted donations and grant revenue.

Question 19

When do Australian grant funders require an audit or review?

Accepted Answer

Requirements vary by funder and grant size. Commonwealth grants under the CGRGs often require independent review or audit depending on grant value and the recipient's overall revenue. State bodies and foundations may specify assurance levels in grant agreements. ACNC-registered charity recipients must also meet medium and large charity audit or review thresholds — revenue over $250,000 generally triggers review or audit requirements.

Question 20

What happens if grant expenditure fails a compliance audit?

Accepted Answer

Funders may recover misspent amounts, suspend future payments, or terminate grant agreements if expenditure is ineligible or insufficiently evidenced. Compliance findings are reported to the funder and may require corrective action plans. We identify eligibility issues during preparation rather than during the funder's assurance review.

Question 21

How should grant income be accounted for in Australian charity accounts?

Accepted Answer

Under AASB 1059, grant income is recognised when conditions attaching to the grant are substantially met and receipt is probable. Restricted grants must be shown separately in fund accounts with expenditure matched against conditions. We maintain restricted fund tracking so grant compliance audits reconcile directly to the charity's financial statements and ACNC Annual Information Statement.

Question 22

What is ASRE 2400 and when is a review engagement appropriate?

Accepted Answer

ASRE 2400 is the Australian Standard on Review Engagements issued by the AUASB. It governs limited assurance engagements where the practitioner performs inquiry and analytical procedures but does not obtain audit-level evidence. Reviews are appropriate when stakeholders need some independent comfort — such as a bank covenant — but do not require a full ASA audit.

Question 23

What is the difference between an ASA audit and an ASRE 2400 review?

Accepted Answer

An ASA audit provides reasonable assurance that financial statements are free of material misstatement through extensive testing, confirmation, and control evaluation. An ASRE 2400 review provides limited assurance based on inquiry and analytical procedures — the practitioner states that nothing came to their attention indicating material misstatement. Reviews are less rigorous, less costly, and provide a lower level of assurance.

Question 24

Can a review or compilation replace a statutory audit?

Accepted Answer

Only if no party requires a full audit. Large proprietary companies must have ASA audits under Part 2M.3. Public companies, disclosing entities, ACNC large charities, and APRA-regulated entities require full audits regardless of stakeholder preference. Small proprietary companies qualifying for the section 292 exemption may use review or compilation engagements if lenders and investors accept limited or no assurance.

Question 25

Why use external auditor coordination instead of managing the audit internally?

Accepted Answer

Finance teams often lack bandwidth to respond promptly to detailed PBC requests while running day-to-day operations. We maintain audit-specific expertise in ASA evidence requirements and AASB disclosures — responding faster and more completely than general finance staff. Faster responses reduce auditor waiting time, which directly reduces billable hours.

Question 26

Can you help if we disagree with proposed audit adjustments?

Accepted Answer

Yes. We review proposed adjustments against AASB requirements and supporting evidence, prepare management responses with additional substantiation where adjustments are disputed, and escalate material disagreements to directors and the audit committee before the draft report stage.

Question 27

Do you replace our external registered company auditor?

Accepted Answer

No. External auditor coordination is a support service — your registered company auditor remains independent and issues the audit, review, or compilation report under AUASB Standards and APES 110. We prepare records, manage communications, and facilitate fieldwork but do not perform audit procedures or sign reports, preserving auditor independence required by the AUASB and APESB.

Question 28

Does my Australian company need a statutory audit?

Accepted Answer

Small proprietary companies are generally exempt from audit unless ASIC, shareholders (5% or more), or lenders require one. Large proprietary companies and all public companies must be audited. We assess your Corporations Act 2001 obligations and prepare accordingly.

Question 29

What auditing standards apply in Australia?

Accepted Answer

Australian Auditing Standards (ASA) apply to all statutory audits, converged with International Standards on Auditing (ISA). Financial statements follow AASB standards. Only auditors registered with ASIC under the Corporations Act can sign audit opinions on company financial reports.

Question 30

How do we prepare for an ATO audit alongside our financial audit?

Accepted Answer

ATO audits examine tax return positions independently of your financial statement audit. We prepare reconciliations between accounting profit and taxable income, maintain R&D tax incentive documentation, and ensure BAS figures match audited revenue and GST accounts.

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