Are you required to be audited in Australia, as a small entity or as a large entity but part of a larger group?

Australia has complex audit requirements. Below is a short reference but not serve as a formal advice to any specific circumstance.

Scenario 1: A small entity which consolidated into its Australian parent company.

As a rule of thumb, small proprietary companies controlled (no matter 100% or not, no matter it is part of a large group or not) by foreign companies for all or part of the financial year where a parent company (which must be an Australian company or a registered foreign company) lodged consolidated financial statements for that financial year with ASIC, you are not required to appoint auditors or prepare or lodge financial reports. This small entity does not have to apply for an audit relief.

Scenario 2: A small entity which is not consolidated into any Australian entity.

As a rule of thumb, small proprietary companies controlled by foreign companies for all or part of the financial year and are not part of a large group in Australia and are not consolidated into any Australian entity, you are required to appoint auditors for auditing annual general purpose financial statements and reporting to ASIC annually, unless you obtain ASIC audit relief beforehand.

Scenario 3: A large Pty Ltd

As a rule of thumb, large proprietary companies require annual audit every year. However, there are certain exemptions including but not limited to below Scenario 4.

Scenario 4: A 100% owned large entity which is not consolidated into any Australian entity.

If the Australia-based subsidiary is a large Pty Ltd in its own rights and it is 100% owned by the Australian parent company, and the Australian parent company lodges its audited consolidated GPFS with ASIC, this 100% owned large Pty Ltd can apply for an audit relief under ASIC Corporations (Wholly-owned Companies) Instrument 2016/785 requiring a deed of guarantee with its Australian parent company.

Scenario 5: A majority-owned large entity which is not consolidated into any Australian entity.

If the Australia-based subsidiary is a large Pty Ltd in its own rights and it is NOT 100% owned by the Australian parent company, this majority-owned large subsidiary must conduct an annual audit because it is not possible to enter into a deed of guarantee with its parent required by regulations. Therefore, it cannot apply for audit relief.

Legislation references:

• ASIC Corporations (Foreign-Controlled Company Reports) Instrument 2017/204.

• ASIC Corporations (Wholly-owned Companies) Instrument 2016/785

Written by Tiger Consulting Global. All rights reserverd 2025