Chartered Accountants Australia and New Zealand warns of economic risk as reporting thresholds double

Chartered Accountants Australia and New Zealand

Peak accounting body Chartered Accountants Australia and New Zealand (CA ANZ) is calling for urgent consultation and a clear-eyed analysis of the impacts before the Government doubles financial reporting thresholds for mid-sized Australian companies without modelling or stakeholder input.

The 2026 Federal Budget proposes doubling the thresholds that trigger mandatory financial reporting. Consolidated revenue moves from $50 million to $100 million, and consolidated gross assets from $25 million to $50 million. The 100-employee threshold is unchanged. Companies falling below two of the three will no longer need to lodge audited financial statements, directors' reports or sustainability reports.

CA ANZ CEO, Ainslie van Onselen, said the proposed thresholds would place Australia significantly out of step with comparable economies.

“The companies that would lose their audit obligation are not fringe players. Builders, suppliers, distributors, manufacturers and other mid-sized private businesses rely on audited financial statements to demonstrate their financial health to the employees, creditors and customers who depend on them.

"The proposed thresholds are multiples higher than where audited financial reporting kicks in for companies in economies like the United Kingdom, Singapore, and the European Union," Ms van Onselen said.

While CA ANZ supports reviewing thresholds to ensure they keep pace with the broader economy, Ms van Onselen said doubling them in a single move, without consultation or economic modelling, warranted far greater scrutiny.

“Doubling thresholds overnight, without consultation or economic modelling, is an unacceptable risk to Australia's mid-market," she said.

"A lack of financial reporting processes, systems or audits is a consistent factor in business insolvencies. Removing the requirement for mid-sized companies raises the risk profile of Australia's mid-market significantly.

"Audited financial reporting is not red tape. Rather, it is a financial governance mechanism that reduces the need for more prescriptive regulation. When it disappears, the risk doesn't disappear with it, it shifts onto everyone else in the economy,” she said.

CA ANZ’s Reporting and Assurance Leader, Amir Ghandar FCA said the policy discussion had been complicated by the Government applying the same thresholds to both financial reporting and climate reporting obligations - two regimes with different policy rationales.

"This debate has become confused because the policy considerations for audited financial reporting are different from those of climate reporting, yet the current model only allows you to choose one set of thresholds," Mr Ghandar said.

"What this means in practice is you potentially end up throwing the financial governance risk baby out with the climate disclosure bathwater, not because climate disclosure isn't important, but because the two regimes have been conflated when they shouldn't be.”

Behind every mid-sized business are employees, suppliers, and customers making decisions based on financial information they trust. CA ANZ is calling on the Government to consult impacted stakeholders and assess the full economic impacts before these changes take effect.

About Chartered Accountants Australia and New Zealand

Chartered Accountants Australia and New Zealand represents more than 140,000 financial professionals, supporting them to make a difference to the businesses, organisations and communities in which they work and live. Chartered Accountants are known as Difference Makers. The depth and breadth of their expertise helps them to see the big picture and chart the best course of action.

www.charteredaccountantsanz.com

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