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What is an annual report

An Annual Report serves as a comprehensive document that presents key insights into your company’s financial standing and advancements over the preceding year. This report can take the form of a digital PDF or a printed version, with larger corporations commonly making it accessible on their official websites.

It encapsulates significant events from the past year, highlighting achieved goals and areas where objectives fell short. The Annual Report typically encompasses statistics, strategies, and future goals, aiming to provide partners and stakeholders with a thorough understanding of the company’s performance.

In Australia, businesses are mandated to compile and submit financial reports to the Australian Securities and Investments Commission (ASIC) and a Business Activity Statement (BAS) to the Australian Tax Office by the conclusion of each fiscal year. Auditing of annual financial reports is obligatory, although certain conditions may warrant exemptions from this obligation.

The business activity statement (BAS)

The Business Activity Statement (BAS) is a formal submission made to the Australian Taxation Office by registered business entities, outlining their tax obligations. This includes aspects such as goods and services tax, pay as you go withholding, pay as you go instalments, fringe benefits tax, wine equalisation tax, and luxury car tax.

The ATO dispatches the BAS to businesses approximately two weeks before the reporting period concludes, and businesses can submit it through various channels, including mail, phone, electronic lodgment systems facilitated by tax agents, or the Australian Taxation Office business portal.

The BAS fields to be completed depend on business registrations and whether it is a monthly or quarterly BAS. It outlines taxation liabilities such as total sales and income, other supplies, exports, other GST-free supplies, total GST-free and input-taxed supplies, total taxable supplies, total taxable supplies after adjustments, and luxury car tax.

Financial reporting

While all companies should maintain financial records to comprehend their operational performance, specific types of companies are required to prepare and lodge financial reports with ASIC.

Generally, companies must lodge reports where:

  • there are substantial sums of money involved
  • the general public has invested funds with the company, or
  • the company exists for charitable purposes only and is not intended to make a profit. See charities registered with the ACNC if your company is a charity registered with the Australian Charities and Not-for-Profits Commission.

The annual financial report includes:

  1. Statement of financial position: Shows the financial status at the end of the year.
  2. Profit and loss statement: Reflects the financial performance for the year.
  3. Cash flow statement: Details the cash movements throughout the year.
  4. Changes in equity statement: Illustrates changes in equity.
  5. Consolidated financial statements: Required by accounting standards, may include parent entity financial statements under certain conditions.
  6. Notes to financial statements: Discloses necessary information.
  7. Directors’ declaration: States compliance with standards, true representation, ability to pay debts, and adherence to the Corporations Act.
  8. Directors’ report: Includes the auditor’s independence declaration.
  9. Auditor’s report: Presented as part of the report.