Do we count revenue, assets or employees, and how many of the three?

Two of the three. Revenue is consolidated revenue for the financial year, while gross assets and employee numbers are measured at the end of the financial year, with part-time employees counted as a fraction of a full-time equivalent. All three tests cover the entity and every entity it controls.

Do our subsidiaries have to report separately or does the parent cover them?

Each entity is tested on its own. A subsidiary that must lodge its own financial report under Chapter 2M and meets a section 292A test prepares its own sustainability report, even where the parent reports as well. Being consolidated into the parent's report does not by itself remove the obligation.

What is our organisational boundary and who decides it?

Your organisational boundary is the set of entities and facilities whose emissions you report, and the basis on which you include them. Management decides it, the board or audit committee approves it, and it should reconcile to the consolidated entity in your financial report. Operational control is the common Australian starting point, and the friction sits in joint ventures, leased sites, franchises and recent acquisitions.

Glossary›Regulation, capture and thresholds / Regulation, capture and timing›Consolidated entity (reporting boundary for capture)

Glossary term

Cluster B · B13

Tier 1 · differentiator

Consolidated entity (reporting boundary for capture)

Definition

The consolidated entity is the boundary used to test whether an entity is captured. The size thresholds in section 292A are measured for the entity together with the entities it controls, applying the consolidation requirements in the accounting standards. A group of individually small companies under one parent is assessed as one consolidated entity and can be captured where no member would be alone.

Corporations Act 2001 (Cth) s 292A

· consolidated revenue, consolidated gross assets and employees of the entity and the entities it controls ·

In force

On this page

In practice
What the assurer does with it
Commonly confused with
Sources
Related terms
Related questions

Cluster

B · Regulation, capture and thresholds / Regulation, capture and timing, 26 terms

In practice

This is the single most common reason a privately held group is captured without realising it, and the arithmetic is worth doing explicitly.

Three tests, two of three must be met, all measured on a consolidated basis:

Group

Consolidated revenue

Consolidated gross assets

Employees

Periods commencing on or after

Group 1

$500m or more

$1bn or more

500 or more

1 January 2025

Group 2

$200m or more

$500m or more

250 or more

1 July 2026

Group 3

$50m or more

$25m or more

100 or more

1 July 2027

Four points decide real cases.

Consolidation is determined by control, not by ownership percentage or by legal form. The accounting standards definition applies. Entities a group controls are in, whether or not they are wholly owned, whether or not they share a name, and whether or not they have ever been presented as part of the group commercially.

Trusts and non-company entities count where they are controlled. A structure built around a family trust, a property trust and two operating companies is tested as one consolidated entity if the accounting standards say one party controls the others. Many privately held groups have never prepared consolidated financial statements and have therefore never seen their own consolidated revenue figure.

Gross assets, not net. Debt does not reduce the figure. A property-holding group with substantial borrowings can be well past the Group 3 gross assets test while its net asset position looks modest.

Two of three, so a single dominant metric is enough with one other. A labour-intensive services group with $55 million of revenue and 120 employees meets two of the Group 3 tests with a near-empty balance sheet.

The measurement basis for employees is the point most likely to decide a marginal Group 3 case, and it is also the point on which the least specific public guidance exists. It is measured at the end of the financial year. Whether part-time staff are counted on a headcount or full-time-equivalent basis, and how casuals and labour-hire are treated, is not resolved by the bare words of the section. An entity sitting close to 100 should get the basis advised and documented rather than assumed, because the answer determines whether a reporting obligation exists at all.

And the gateway still comes first. Meeting the thresholds does not create an obligation on its own. Section 292A applies only to an entity already required to prepare an annual financial report under Chapter 2M.

What the assurer does with it

Capture sits in engagement acceptance, not fieldwork, because it determines whether an engagement exists and at what assurance level. The assurer asks for the threshold calculation and expects it agreed to the audited consolidated financial statements: consolidated revenue and consolidated gross assets to the consolidated statements, employee numbers to a dated payroll extract with a stated counting basis. They accept a calculation on consolidated audited figures with the control determinations documented. They reject a calculation on single-entity figures, on management accounts, on unconsolidated aggregation that simply adds up the members without eliminations, and a headcount with no stated basis and no supporting extract. Where the group has controlled entities it has not previously consolidated, expect the control assessment itself to be queried, because a wrong control conclusion moves the entity in or out of the regime rather than merely changing a number.

Commonly confused with

The organisational boundary for the emissions inventory, which is a different question answered by a different framework. Capture is determined by accounting-standards consolidation. The emissions boundary is determined under the GHG Protocol using operational control, financial control or equity share, and it does not have to coincide with the consolidation boundary. An entity can be captured on a consolidated basis and then, quite properly, draw its Scope 1 and Scope 2 boundary differently, but it must say so in the basis of preparation and be able to explain the difference.