As part of the Australian Charities and Not-for-Profit Commission’s (ACNC’s) push to reduce the reporting and compliance burden for charities, the thresholds at which a charity is required to report have been increased significantly.
Which charities will be impacted by the threshold increase?
In some cases, the thresholds have more than doubled for the following charities:
- Those with a revenue of less than $500k only need to submit an online Annual Information Statement;
- Those with revenue between $500k and $3m can submit a financial report which has either been audited or reviewed; and
- Only those with a revenue in excess of $3m require their financial report to be audited.
How will this affect my auditing process?
Whilst this is great news for some charities, it is important to recognise that it is not just your size that determines the need for an audit. Charities need to be aware of the specifics of their own constitution or governing document, along with any requirements of external financiers.
Committees or Boards may also request an audit or review, as these can be a cornerstone in ensuring good governance. And with Charities coming under more security from the public after the recent bushfires, COVID-19, and floods – an audit or review can help give you peace of mind.
What Accounting Standards do I need to comply with?
Whilst a charity may not be required to lodge audited or reviewed financial statements with ACNC, there are 7 Accounting Standards that must still be complied with, even when preparing Special Purpose Financial Reports.
- AASB 101, Presentation of Financial Statements;
- AASB 107, Statement of Cashflows;
- AASB 108, Accounting Policies, Changes in Accounting Estimates and Errors;
- AASB 1048, Interpretation of Standards;
- AASB 1054, Australian Additional Disclosures;
- AASB 2019-4, Disclosure in Special Purpose Financial Statements of Not-for-Profit Sector Entities on Compliance with Recognition and Measurement Requirements; and
- AASB 124, Related Party Disclosures (from June 2023), although some disclosures will be required for June 2022 for large charities only.
From June 2022, all large charities are required to include Key Management Personnel (KMP) disclosures where there are two or more KMP’s, in aggregate.
We are here to help
Whilst the Standard’s themselves are not new, the requirement for Special Purpose entities to apply the last couple are quite recent changes, and therefore it is important to ensure that your financials are complying.
Our Audit team is here to support you through this threshold increase. If you would like to discuss how this change may impact you and your charity, please contact us today on either (03) 5221 6399 or firstname.lastname@example.org.
This article was written by Davidsons Manager Lucy Partridge.
Disclaimer: this information is of a general nature and should not be viewed as representing financial advice. Users of this information are encouraged to seek further advice if they are unclear as to the meaning of anything contained in this article. Davidsons accepts no responsibility for any loss suffered as a result of any party using or relying on this article.