Asian companies establishing operations across Australia and New Zealand need to understand the statutory audit and financial reporting requirements in each market. Whilst both countries apply International Financial Reporting Standards (IFRS), the thresholds that trigger audit obligations differ significantly between jurisdictions.
This article outlines the key statutory requirements that group financial controllers should consider when planning trans-Tasman operations.
Australia: Statutory Audit Requirements
Company Classification and Control Structure
Under the Corporations Act 2001, audit requirements depend on company classification and control structure.
a) Large Proprietary Company Classification
A proprietary company is classified as “large” under Section 45A if it satisfies at least two of the following criteria:
- Consolidated revenue of A$50 million or more
- Consolidated gross assets of A$25 million or more
- 100 or more employees (including employees of controlled entities)
The critical word is “consolidated.” Companies meeting the large proprietary company test must prepare audited financial reports and directors’ reports under Chapter 2M of the Corporations Act.
b) Foreign-Controlled Companies
Small proprietary company controlled by a foreign company generally must prepare, audit, and lodge financial reports with ASIC unless exemptions apply. Even entities qualify for relief available, they may still require audited financial statements under Section 292(2) if directed by ASIC or if shareholders holding at least 5% of voting shares request them.
Registered foreign companies (overseas companies registered to carry on business in Australia) must lodge financial statements with ASIC under Section 601CK if required to prepare financial statements under the law of their place of incorporation.
Financial Reporting Framework
Australian companies preparing general purpose financial statements that must comply with Australian Accounting Standards (AASB), which are equivalent to IFRS as issued by the International Accounting Standards Board with Australian-specific paragraphs. ASIC provides guidance on whether companies should prepare General Purpose Financial Statements (GPFS) or Special Purpose Financial Statements (SPFS).
New Zealand: Statutory Audit Requirements
Company Classification and Control Structure
Statutory financial reporting and audit obligations for New Zealand companies arise primarily from the Financial Reporting Act 2013 and the Companies Act 1993, supported by standards issued by the External Reporting Board (XRB). Before determining the applicable accounting standards, entities must first assess whether they have a legislative obligation to prepare financial statements.
A company is generally considered large if it exceeds the relevant asset or revenue thresholds for each of the two preceding accounting periods.
a) New Zealand Companies with less than 25% overseas ownership
A company is large if either of the following is exceeded for the two preceding periods:
Total assets > NZ$66 million, or
Total revenue > NZ$33 million.
These companies must prepare financial statements but may opt out of an audit if a resolution is passed by a 95% majority of shareholders. However, this opt-out is only available if the company has 10 or more shareholders; companies with fewer than 10 shareholders are “opted-out” by default unless shareholders holding 5% or more of the voting shares require an audit.
b) Companies With significant overseas ownership (>25%)
If a New Zealand company has 25% or more of its voting shares held by an overseas person or entity (but is not a subsidiary of an overseas body corporate), the higher thresholds still apply to determine if it is “large”:
Total Assets > NZ$66 million
Total Revenue > NZ$33 million
Such companies must file its audited financial statements with the New Zealand Companies Office.
c) Subsidiaries of overseas companies and overseas branches
Where a New Zealand company is a subsidiary of a body corporate incorporated overseas, or is an overseas company (branch) carrying on business in NZ, significantly lower thresholds apply:
Total Assets> NZ$22 million
Total Revenue> NZ$11 million
These entities must have their financial statements audited and filed with the New Zealand Companies Office within five months of their balance date.
Financial Reporting Framework & The FMC Regime
New Zealand applies a tiered reporting framework based on the entity’s size and public accountability
- Tier 1 (Full NZ IFRS): Mandatory for entities with “public accountability”—primarily FMC Reporting Entities (e.g., listed issuers, banks, and insurers). These entities face a shorter four-month filing deadline. If an Asian-owned subsidiary is deemed to have “public accountability”—for instance, by issuing debt on a New Zealand exchange—it is bumped to Tier 1 regardless of its revenue or asset size.
- Tier 2 (NZ IFRS RDR): Applies full recognition and measurement with reduced disclosure requirements. Many Asian-owned subsidiaries qualify for Tier 2, provided they do not have public accountability, reducing the disclosure burden while remaining consistent with group IFRS policies
Why Audit Matters Beyond Compliance
For Asian parent companies, statutory audit serves purposes beyond regulatory compliance:
First-time establishment: When acquiring an Australian or New Zealand business, audit provides assurance that accounting policies align with parent company requirements and IFRS. For example, if a Thai parent company acquires an Australian business that has historically prepared financial statements on a tax basis, the first statutory audit identifies the adjustments needed to align with IFRS for group consolidation.
Ongoing governance: Audit provides independent oversight of subsidiary operations that may be geographically and operationally distant from parent company management. For businesses managed from Singapore, Hong Kong, or elsewhere in Asia, audit offers an additional governance layer over Australian and New Zealand operations.
Group audit efficiency: Parent company group auditors working under International Standard on Auditing 600 (ISA 600) can rely on component auditor work in Australia and New Zealand, provided proper coordination occurs. This can reduce overall group audit costs and timeline pressures compared to parent company auditors conducting all audit work directly.
Practical Considerations for Group CFOs
When establishing or acquiring operations in Australia or New Zealand, group CFOs should:
- Assess statutory obligations immediately
Determine whether audit requirements will be triggered based on size thresholds and control structures. Consider not just initial operations but how growth may change classification over time. - Align accounting policies early
Document key accounting policy choices and how they align with parent company policies for group consolidation. Where IFRS permits choices, document the rationale for the subsidiary’s approach. - Coordinate with group auditors
If parent company group auditors will rely on component auditor work in Australia or New Zealand, establish communication protocols before year-end to align on risk assessment, materiality, and audit scope. - Consider financial year-end alignment
Many Asian companies use 31 December year-ends (China, Indonesia, Malaysia, Thailand) or varied year-ends (Singapore), whilst Australian companies commonly use 30 June and New Zealand companies commonly use 31 March. Subsidiaries can maintain local year-ends and prepare stub periods for consolidation, or change year-ends to align with the parent (subject to transitional filing requirements in each jurisdiction).
Conclusion
Understanding statutory audit requirements in Australia and New Zealand allows Asian parent companies to plan appropriately for compliance obligations, establish effective governance over distant operations, and coordinate efficiently with group auditors. By addressing these requirements early in the establishment or acquisition process, companies can avoid unexpected compliance issues and ensure smooth integration into group reporting processes.
About the Authors
Wen-Shien Chai is a Partner at Moore Australia (WA) in Perth and Co-Chair of the National Asia Desk for Moore Australia. With experience spanning Malaysia, Laos, and Australia, Chai specialises in audit and assurance services for Asian companies with Australian operations. He is fluent in English, Mandarin, and Malay.
Andrew Steel is an Audit Partner at Moore Markhams Wellington in New Zealand. As a registered Qualified Auditor and OAG (Office of the Auditor-General) Approved Auditor, Andrew provides audit and assurance services to organisations across various industries.
