Regulation and the Conceptual Framework Flashcards
Which section of the Corporations Act 2001 deals with preparation of financial statements?
Chapter 2M
Under the Corporations Act, which entities are required to prepare a financial and directors report? (DPLR)
- disclosing entities
- all public companies
- all large proprietary companies
- all registered schemes
What is a public company according to the Corporations Act?
Any company other than a private company
What is a disclosing entity per the Corporations Act?
Section 111AC - a body corporate or investment scheme that has issued enhanced disclosure (ED) securities.
What is the definition of proprietary company under s.45A of the Corporations Act?
Must be:
- Limited by shares or an unlimited company with share capital
- Have no more than 50 non-employee shareholders
- Not do anything that would require disclosure to investors under Chapter 6D (i.e. misstatements or omissions).
What is classed as a small proprietary company under the Corporations Act?
At least 2 of the following for the company and any entity it controls:
- Consolidated revenue of less than $50 million
- Consolidated gross assets of less than $25 million
- Fewer than 100 employees at EOFY (counted on full-time equivalent)
What is a large proprietary company?
Any proprietary company that does not satisfy the definition of a small proprietary company
Are large proprietary companies required to get an audit of a financial report?
Yes, unless granted relief by ASIC.
Under the Corporations Act, how long should an entity keep records relating to financial statements?
Per Part 2M.2, must retain all financial records for 7 years after the transactions covered by the records are completed
Which group has responsibility for overseeing the effectiveness of financial reporting in Australia?
Financial Reporting Council (FRC)
What does AASB 1053 cover?
AASB 1053 covers Application of Tiers of Australian Accounting Standards.
Apply a two-tier differential reporting system for companies preparing general purpose financial statements.
Which AASB standard covers general purpose financial statements?
AASB 101 Presentation of Financial Statements
Which types of entities should prepare general purpose financial statements that comply with Tier 1 reporting under AASB 1053?
(a) for-profit private sector entities that have public accountability
(b) Australian government and State, Territory and Local Governments
Under AASB 1053, how is public accountability determined?
One of the below apply:
- Debt or equity instruments are traded in a public market
- Holds assets in a fiduciary capacity for a broad group of outsiders as one of its primary businesses.
What does being classed as a Tier 1 reporting entity mean?
Under AASB 1053, must comply with all relevant accounting standards.
What 2 fundamental qualitative characteristics must financial information possess to be useful?
- Relevance
- Faithful representation
