Audit obligations for large entities in Australia: What matters now

Cases like this are often dismissed as one-offs. In reality, they highlight a recurring issue: audit obligations are frequently triggered not by deliberate decisions, but by growth itself.

As businesses expand, many unintentionally cross into “large proprietary company” territory. The shift is rarely obvious at the time. Revenue increases, headcount grows, or group structures evolve – and with these changes, audit moves from optional to mandatory.

Under the Corporations Act, a proprietary company is classified as “large” if it meets at least two of the following thresholds: 

• Consolidated revenue of AUD 50 million or more; 
• Consolidated gross assets of AUD 25 million or more; or 
• 50 or more employees. 

Once these thresholds are met, financial reports must comply with accounting standards, include a directors’ report, and be audited and lodged with ASIC.

The challenge is not only understanding the rules, but recognising when they apply. In practice, thresholds are often exceeded gradually, without a clear internal trigger. As a result, audit obligations can go unnoticed until regulatory attention is drawn to the issue.

Regulatory enforcement in this area has become more visible. Financial penalties can be significant, but the more material impact is often commercial. Delays in completing audits can disrupt financing arrangements, stall transactions, and weaken investor confidence where current audited financial information is expected.

Several misconceptions continue to contribute to the problem. Private companies are often assumed to be outside the scope of audit requirements, or it is assumed that some form of grace period applies once thresholds are exceeded. Others treat audit as a technical compliance exercise, rather than a broader governance requirement. In practice, obligations apply as soon as the criteria are met, and the consequences of non-compliance extend beyond regulatory penalties.

Audit is increasingly viewed as a signal of financial discipline and transparency, particularly for organisations operating in growth or transaction-driven environments. As governance expectations continue to evolve, identifying when audit obligations arise – and responding accordingly – is less about compliance, and more about maintaining credibility.

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Gary Williams is a director at Rosenfeld Kant with over 30 years of experience in audit, tax, and advisory. He works with privately owned and growth-stage businesses, with specialist expertise in complex audit requirements, including the film and media sector.