22 June 2007 
 
Institute welcomes simpler regulatory systems bill  
 
Many Australian proprietary companies will no longer be required to undergo an audit or lodge their financial reports with the Australian Securities and Investment Commission (ASIC), as a result of the Government’s Simpler Regulatory System Bill passed in Parliament this week, which substantially increased the revenue and asset thresholds for financial reporting of large proprietary companies. 
 
The Institute of Chartered Accountants in Australia welcomed the passage of the Bill and related legislative changes, claiming that it would remove a lot of red tape in the areas of financial services, company reporting obligations, auditor independence and compliance. 
 
CEO for the Institute Graham Meyer said that by increasing the revenue and asset thresholds that determine a large company, red tape and compliance costs would be greatly reduced through more proprietary companies not having to have an audit.  
 
“However, all private companies should be mindful that if two out of the three tests apply to them then they will still be expected to have an audit and provide their financials to ASIC,” Mr Meyer said. 
 
“The Institute has appreciated the consultative approach adopted by the Government in developing the Bill, having made submissions in response to the Rethinking Regulation Report 2006 and the Proposals Paper 2006 and also consulted with the Department of Treasury on issues coming out of the consultation process leading up to the Bill,” Mr Meyer said. 
 
Other significant legislative changes supported by the Institute include:

• Financial planners will need to provide only a Record of Advice (RoA), rather than a full Statement of Advice (SoA) for consumers investing less than $15,000
• Financial planners will also not be required to produce SoAs where the advice does not involve the recommendation of a product, and where no remuneration is received
• Companies will be allowed to make a single up-front payment of annual review fees that would be incurred over a 10-year period, reducing the transactional costs associated with ongoing lodgement
• The online distribution of annual reports will be permitted, enabling companies to minimise distribution costs of reporting to shareholders
• A reduction in complexities by incorporating earlier remedial measures made under the Corporations Regulations and ASIC Class Orders into the Corporations Act. Compliance burden for auditors will be reduced, by making improvements to the regime without weakening the existing robust auditor independence framework. 
   
  “Not only are businesses the winners as a result of the legislation but so are mum and dad investors as the changes to financial services regulation will see a reduction in the costs of disclosure that will translate into increasingly affordable financial advice for consumers,” Mr Meyer said. 
   
  “Whilst the new legislation will deliver some very significant measures, the Institute will continue to work with the Government and its agencies on the implementation, to ensure that the desired outcome is achieved,” he said.