Commonwealth Numbered Regulations - Explanatory Statements

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CORPORATIONS (ABORIGINAL AND TORRES STRAIT ISLANDER) AMENDMENT (FINANCIAL REPORTS) REGULATION 2014 (SLI NO 164 OF 2014)

EXPLANATORY STATEMENT

Select Legislative Instrument No. 164, 2014

Issued by the authority of the Minister for Indigenous Affairs

Corporations (Aboriginal and Torres Strait Islander) Act 2006

Corporations (Aboriginal and Torres Strait Islander) Amendment (Financial Reports) Regulation 2014

General outline

The Corporations (Aboriginal and Torres Strait Islander) Act 2006 (the Act) provides a special statute of incorporation for Aboriginal and Torres Strait Islander peoples that takes account of the special risks and needs of the Indigenous corporate sector and also aligns with modern corporate governance standards and the Corporations Act 2001. This includes financial reporting standards. The Act provides flexibility for corporations to accommodate specific cultural practices and tailoring to reflect the particular needs and circumstances of individual groups. In acknowledgement of the fact that most corporations are located in remote or very remote areas, and may provide essential services or hold land, the Act also offers safeguards through the Registrar's unique regulatory powers.

Subsection 633-1(1) of the Act provides that the Governor-General may make regulations, prescribing matters required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Act.

Background

The purpose of the Regulation is to enable members and fellows of the Institute of Public Accountants (IPA) to audit financial reports of small and medium sized Aboriginal and Torres Strait Islander corporations that report under subregulation 333-16.02(2) of the Corporations (Aboriginal and Torres Strait Islander) Regulations 2007 (the Regulations).

Subsection 333-5(3) of the Act provides that the regulations may require each Aboriginal and Torres Strait Islander corporation in a class of Aboriginal and Torres Strait Islander corporation to prepare a financial report for a financial year.

Subsection 333-15(1) of the Act provides that the regulations may require a section 333-5 report to be prepared in the manner required by the regulations. Subsection 333-15(2) of the Act provides that the regulations may require a financial report to be audited and require that the auditor be an individual auditor who has particular qualifications or experience, or an audit firm that has a member or members who have particular qualifications or experience, or an authorised audit company.

The Regulations provide for certain medium and small sized Aboriginal and Torres Strait Islander corporations to prepare financial reports under subdivision 333-B of the Regulations. These financial reports must be audited, if the corporation reports under subregulation 333-16.02(2). These financial reports may be audited under subregulation 333-16.02(3) by a registered company auditor (or their firm or audit company) or by a Chartered member or an Affiliate of the Institute of Chartered Accountants in Australia, or by a Certified Practising Accountant or a Fellow of CPA Australia.

The Regulation inserts a new paragraph at the end of subregulation 333-16.02(3) adding members and fellows of the IPA to the list of auditors who may audit these financial reports.

The Regulation will bring the Regulations into line with other Commonwealth legislation which recognises the IPA. 

The Regulation will also increase the pool of eligible qualified accountants who can audit the financial reports of these small and medium sized corporations and provide them with greater choice for auditing services, particularly in remote and regional areas.

The Act does not impose any conditions that need to be satisfied before the power to make the Regulations may be exercised.

The Regulation is a legislative instrument for the purposes of the Legislative Instruments Act 2003.

Commencement

The Regulation commences on the day after it is registered.

Consultation

Public consultation was undertaken. The consultation included circulation of an exposure draft of the Regulation. The proposal and Regulation exposure draft were notified on the public website of the Registrar of Aboriginal and Torres Strait Islander Corporations (the Registrar) and the public was invited to make submissions. The Registrar also wrote to the Institute of Public Accountants, Certified Practising Accountants Australia and the Institute of Chartered Accountants Australia seeking their submissions on the proposal. Responses to the Regulation exposure draft were considered in the finalisation of the Regulation.

Compatibility with Human Rights

A Statement of Compatibility with Human Rights has been completed for the Regulation, in accordance with the Human Rights (Parliamentary Scrutiny) Act 2011. The Statement's overall assessment is that the Regulation is compatible with human rights as it does not raise any human rights issues. The Statement appears at the end of this Explanatory Statement.

Regulatory Impact Analysis

The Office of Best Practice Regulation (the OBPR) has been consulted and considered that that the Regulation is minor and machinery in nature and no regulation impact statement is required (OBPR reference number 17657). It is unlikely to have any compliance costs on business, community organisations or individuals.

Explanation of the provisions

Section 1 (Name)

This section provides that the name of the Regulation is the Corporations (Aboriginal and Torres Strait Islander) Amendment (Financial Reports) Regulation 2014.

Section 2 (Commencement)

This section provides for the Regulation to commence on the day after it is registered.

Section 3 (Authority)

This section provides that the Regulation is made under the Corporations (Aboriginal and Torres Strait Islander) Act 2006.

Section 4 (Schedules)

This section provides that each instrument that is specified in a Schedule is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule has effect according to its terms.

Schedule 1 - Amendments

Schedule 1, item 1

This item inserts new paragraph (d) at the end of subregulation 333-16.02(3) adding members and fellows of the Institute of Public Accountants to the list of auditors who may audit the financial reports of small and medium sized Aboriginal and Torres Strait Islander corporations that report under subregulation 333-16.02(2) of the Regulations.

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