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Costs and benefits of mandatory auditing of for-profit private and not-for-profit companies in Australia

Carey, Peter, Knechel, W. Robert and Tanewski, George 2013, Costs and benefits of mandatory auditing of for-profit private and not-for-profit companies in Australia, Australian accounting review, vol. 23, no. 1, pp. 43-53, doi: 10.1111/auar.12003.

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Title Costs and benefits of mandatory auditing of for-profit private and not-for-profit companies in Australia
Author(s) Carey, Peter
Knechel, W. Robert
Tanewski, GeorgeORCID iD for Tanewski, George orcid.org/0000-0003-3668-3416
Journal name Australian accounting review
Volume number 23
Issue number 1
Start page 43
End page 53
Total pages 11
Publisher Wiley - Blackwell Publishing Asia
Place of publication Richmond, Vic.
Publication date 2013-03
ISSN 1035-6908
1835-2561
Keyword(s) mandatory auditing
for-profit company
not-for-profit company
audit relief
Summary This paper addresses the paucity of research surrounding the mandatory auditing of for-profit private and not-for-profit companies in Australia. We document the various mandatory auditing provisions under the Corporations Act and identify over 22 000 companies that lodge audited accounts with the regulator under federal law. In 2011, 6339 large proprietary companies, 186 small proprietary companies, 2797 foreign-owned companies, 3985 unlisted public companies and 8404 public companies limited by guarantee had an obligation under the Corporations Act to lodge audited accounts. While large proprietary and foreign-owned companies have an option to apply to the Australian Securities and Investment Commission for audit relief, we estimate that less than 10% are granted audit exemption. We document that since 1995 an additional 1500 large proprietary companies that should have lodged under the size provisions of the Corporations Act have been granted exemption from doing so (i.e., grandfathered), although these firms appear to be subject to an annual audit even though they do not lodge accounts. We estimate the costs and discuss the potential public interest and firm-level benefits associated with the mandatory auditing of for-profit private and not-for-profit companies in Australia.
Language eng
DOI 10.1111/auar.12003
Field of Research 150102 Auditing and Accountability
Socio Economic Objective 970115 Expanding Knowledge in Commerce, Management, Tourism and Services
HERDC Research category C1 Refereed article in a scholarly journal
Copyright notice ©2013, Wiley-Blackwell Publishing Asia
Persistent URL http://hdl.handle.net/10536/DRO/DU:30052861

Document type: Journal Article
Collection: School of Accounting, Economics and Finance
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Created: Wed, 05 Jun 2013, 14:51:28 EST by Aysun Alpyurek

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