Small business swamped by regulatory overload

In its Small Business White Paper, the IPA noted an increasing number of small business owners are concerned about the way regulators do not appear to consider the impact of new regulations on business owners’ ability to build their businesses.

It also pointed to recent studies showing Australia has a complex regulatory structure for charities and the not-for-profit sectors that needs urgent attention.

“The federal government has been attempting to consolidate regulatory bodies to achieve efficiencies and reduce the cost of regulation. This process has impacted accounting and audit standard-setting,” the paper said.

“Accounting standard-setters are currently reviewing accounting frameworks to determine whether the way in which accounting standards currently apply to a range of small entities ought to change.

“The use of special purpose financial reports for regulatory lodgements is also being reviewed, with the possibility of removal and replacement with a third tier of reporting.”

In its recommendations, the IPA advised the federal government should, among other things, continue to emphasise the need for ‘risk-based’ regulation, so individuals and entities that are at a ‘low risk’ of non-compliance are not subjected to inappropriate and unnecessary regulatory scrutiny.

It also said the federal government should take all necessary steps to consolidate corporate and other registers so that small business owners are able to deal with one portal for all their compliance needs.

Further, the white paper also recommended the Australian Accounting Standards Board should continue to review existing accounting frameworks “to ensure they reflect the needs of the community and maintain the integrity of the measurement and recognition requirements contained in international financial reporting standards”.

“Preparers of special purpose financial statements will need to review the format of their financial statements following changes made by international accounting standard-setters to the conceptual framework,” the paper said.