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Kosta Bros: Financial Case Study

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Kosta Bros in 1997 is a large proprietary and a reporting entity. It became a proprietary company in 1980. As stated in CA 2001 s45A (3) , a proprietary company is a large proprietary company for a financial year if it satisfies at least two of the following: 1. The gross operating revenue is $25 million or more for the financial year; 2. The gross assets is $12.5 million or more at end of the financial year; 3. Have 50 or more equivalent full-time employees. According to the statistics provided in the material and further calculation (see Appendix A1), Kosta Bros satisfied 2 of the conditions by having $13 million assets and 85 EFT employees. Therefore it is a large proprietary. Regarding reporting entity, SAC 1 provides the definition for it: reporting entities as entities of which it is reasonable to expect the existence of users dependent on financial reports for information. To decide whether there is dependent user, SAC para 20-22 offers three criteria: the separation of management from economic interest, the economic or political importance/ influence of entity, and the financial characteristics of entity. The greater extent of above characteristics, the greater possibility of dependent users. Kosta Bros arranged large debt arrangements with Westpac Bank and Commonwealth, and it had considerable asset then, therefore the financial characteristics can be …show more content…

According to CA 2001 s45A (1), a proprietary can have no more than 50 non-employee shareholders, whereas Kosta Bros had 70 shareholders since 2013. Since a company other than a proprietary company is a public company, as defined by CA 2001 s9, Kosta Bros is then a public company. Additionally, it will be a listed public company when it successfully becomes listed on ASX. It will be a disclosing entity as well. Under CA 2001 ss111AC (1), and s111AE an entity is classified as a disclosing entity if its securities are listed on a licensed market e.g.

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