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RSM Bird Cameron says private company audits are being “left well behind” in terms of quality as a result of ASIC’s lax regulation of these entities.
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RSM Bird Cameron issues warning on audit quality
31 July 2014
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When it comes to scrutiny from ASIC, large private company accounts are not targeted as often as those of ASX-listed companies, a statement by the firm said.
Jason Croall, director of assurance and audit at RSM Bird Cameron, said this attitude held by the regulator has affected the quality of audits carried out on privately owned entities.
“The bottom line is that special purpose private company accounts are not afforded the same scrutiny as ASX general purpose accounts, which means the standards of audit and accounting are not as rigorously enforced by directors and auditor.”
“From a quality perspective large private company accounts are just not on ASIC’s radar. While this has led to a significant improvement in auditing and reporting at an ASX company level, private accounts and audits are being left well behind when it comes to quality.”
ASIC has released guidance that states that if a company chooses to prepare special purpose accounts they must still comply with all the recognition and measurement standards in the accounting framework.
“The numbers in the profit and loss and balance sheet should be the same regardless of whether special purpose or general purpose accounts are prepared,” said Mr Croall.
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“However, special purpose companies are able to reduce the disclosure for certain items in their accounts. For example related party disclosures are not required,” Mr Croall said.
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