Law

ASIC Crackdown: The Importance of lodging your Annual Financial Reports

By 27 May, 2016 January 21st, 2019 No Comments

A disclosing entity or registered scheme must lodge their annual report within 3 months after the end of the financial year, whilst a company must lodge their report with ASIC within 4 months.

Businesses who fail to lodge their annual financial reports with ASIC may find themselves slapped with a prosecution notice.

Under section 319(1) of the Corporations Act 2001 (Cth) (Corporations Act) all registered schemes, disclosing entities and most companies are required to lodge their annual financial reports with ASIC.

All public companies, companies limited by guarantee and large proprietary companies are obligated to comply with s 319(1).  Certain small companies must also lodge their financial reports and statements with ASIC, including small proprietary companies that are foreign-controlled, or those small companies and proprietary companies that are directed by their shareholders or ASIC to prepare a report.

Failure to comply with s 319(1) of the Corporations Act is a criminal charge.  It is also an offence of strict liability meaning that a company will be convicted even though it was genuinely ignorant of the factors making their act or omission a criminal offence.

A disclosing entity or registered scheme must lodge their annual report within 3 months after the end of the financial year, whilst a company must lodge their report with ASIC within 4 months.

Even if a company has not made a profit or traded during the financial year, a financial report is still required to be lodged.

A company’s financial reports should be completed and lodged with a copy of Form 388 Copy of financial statements and reports, unless the company lodges its financial statements and reports with the ASX.  A different form (Form 405) should be used for any entity that is a registered foreign company.

The financial reports and statements supplied must comply with Australian Accounting Standards. Under the Act, the components of a financial report include:

  • a statement of financial position as at the end of the year
  • a statement of comprehensive income for the year
  • a statement of cash flows for the year
  • a statement of changes in equity
  • consolidated financial statements
  • notes to financial statements
  • directors’ declaration that the financial statements: comply with accounting standards, have been made in accordance with the act, give a true and fair view of the company/scheme/entity, and there are reasonable grounds to believe the company/scheme/entity will be able to pay its debts)
  • a directors’ report
  • an auditor’s report.

It is therefore important that all entities, companies and schemes are aware of their reporting obligations to ASIC.  Whilst this requirement may be easy to overlook, failure to lodge annual financial reports may result in a company facing criminal charges.

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