media release (16-256MR)

ASIC consults on audit relief for proprietary companies and reporting relief for wholly owned companies

Published

ASIC has today issued a consultation paper proposing to remake three class orders that are due to expire (‘sunset’) on 1 October 2016 and 1 April 2017. The class orders affect the audit of proprietary companies and financial reporting by wholly-owned entities.

The consultation paper also seeks feedback on ASIC guidance documents on audit relief and on reporting relief for wholly-owned companies.

The class orders proposed to be remade under Consultation Paper 267 Remaking and repealing ASIC class orders on audit and financial reporting  (CP 267) are:  

  • Class Order [CO 98/1417] Audit relief for proprietary companies
  • Class Order [CO 98/1418] Wholly-owned entities
  • Class Order [CO 01/1256] Qualified accountant.

ASIC proposes to remake these class orders as, in our view, they are operating effectively and efficiently, and continue to form a necessary and useful part of the legislative framework.

Each class order has been redrafted using ASIC’s current style and format, while preserving the current effect of the instrument. The draft ASIC instruments, which reflect the amendments proposed in the consultation paper, are available on our website at www.asic.gov.au/cp under CP 267.

A draft revised Regulatory Guide 115 Audit relief for proprietary companies, and revised pro formas referred to in the instruments, are also attached to CP 267 for comment. As well, ASIC is seeking feedback on existing ASIC guidance on financial reporting relief for wholly owned entities.

The new instruments retain most elements of the existing class orders. However, following consultation with the Australian Prudential Regulation Authority (APRA), we are proposing to no longer allow companies which are regulated by APRA from obtaining the relief under the remade [CO 98/1418]. We understand that in practice, these entities do not currently rely on the relief.

Finally, CP 267 proposes that Class Orders [CO 98/106] Financial reports of superannuation funds, approved deposit funds and pooled superannuation trusts, which is due to expire on 1 October 2017,andClass Order [CO 99/1225] Financial reporting requirements for benefit fund friendly societies, which is due to expire on 1 October 2016, be repealed. ASIC has formed the preliminary view that these class orders no longer form a necessary and useful part of the legislative framework.

Submissions on CP 267 are due on 12 September 2016.

Download CP 267 and draft instruments.

Background

Under the Legislative Instruments Act 2003, all class orders are repealed automatically or ‘sunset’ after a specified period of time (mostly 10 years) unless we take action to exempt or preserve them. This ensures that legislative instruments like class orders are kept up to date and only remain in force while they are fit for purpose and relevant.

Where an instrument is considered to be operating effectively and efficiently and still serves a regulatory purpose we will consult on remaking it even if there will be no significant changes. 

Read more about sunsetting class orders

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