Accounting regulation and the Conceptual Framework

Question 1

A company is a LEGAL ENTITY if it satisfies what two conditions?

Answer 1

1. Incorporated via ASIC

2. Subject to requirements of Corporations Act 2001.

Question 2

What are ATTRIBUTES of a PROPRIETARY COMPANY?

Answer 2

1. Min. 1 member, no maximum member, Max. Of 50
2. Min. of 1 director residing in AU
3. Cannot raise funds from the public but required to have a share capital
4. Classified as Large and Small (1 Jul 2019)
   
   • SMALL PROPRIETARY companies must satisfy AT LEAST TWO of the following criteria:
     a) Consolidated Revenue for financial year is < $50m
     b) Consolidated Gross Assets at end of financial year is < $25m
     c) Fewer than 100 employees at end of financial year.

Question 3

What are the major sources of FINANCIAL REPORTING REGULATION?

Answer 3

1. The CORPORATIONS ACT 2001
2. AUSTRALIAN ACCOUNTING STANDARDS (derived from IFRS)
3. The CONCEPTUAL FRAMEWORK
4. ASX LISTING RULES

Question 4

What are the 5 MAIN BODIES OF ACCOUNTING REGULATION?

Answer 4

1. ASIC
2. ASX
3. AASB
4. FRC
5. APRA

Question 5

What is ASIC and what is it’s role?

Answer 5

• ASIC is corporate, markets and financial services regulator.
• ASIC undertakes financial reporting surveillance with the purpose of improving the quality of financial reporting.
• the role of the ASIC is to enforce and regulate company and financial services laws by:
  a) administering and monitoring implementation of the CORPORATION ACT and investigates and prosecutes for breaches
  b) promotes CONFIDENCE in the financial system

Question 6

What entities does the CORPORATIONS ACT require to prepare FINANCIAL REPORT and a DIRECTORS REPORT for each financial year?

Answer 6

1. All DISCLOSING entities
2. All PUBLIC companies
3. All LARGE PROPRIETARY companies ( in limited sir instances some small proprietary companies may be required to prepare financial reports and directors report if directed to do so by shareholders or the ASIC
4. all REGISTERED SCHEMES

Question 7

What is a DISCLOSING ENTITY?

Answer 7

With few exceptions, entities whose securities are listed on a securities exchange are disclosing entities.

Question 8

What’s is a REGISTERED SCHEME?

Answer 8

Registered scheme refers to a managed investment scheme that is registered under s. 601EB of the CORPORATIONS ACT.