What are my obligations under Australian Charities and Not-for-profits Commission (ACNC)?
Since the ACNC inception in December 2012, charities and not for profit organisations have an obligation to meet the following compliance standards:
- Report to ACNC the details of any legal changes, including:
- Legal name
- Address for service
- Responsible persons
- Governing documents (such as constitutions, trust deeds etc.)
- Record information
- Report annually
- Meet the governance standards
- Meet external conduct standards
- Other obligations (ACNC Website)
To enable the ACNC to keep your records updated, it is imperative that you are aware of the above obligations as these are the minimum standards you must meet to remain a registered charity with the ACNC.
What happens if I do not lodge within the time frames?
Most charities registered with ACNC have a reporting requirement of lodgement six months after their reporting date. This means that there is time to complete the financial statements and have them reviewed or audited (whichever is required, see next section).
Failing to do so in the first year will result in letters from the ACNC and a request/reminder to lodge your financial statements on an annual basis. If you fail to lodge after two consecutive years the charity will be automatically removed from the register and you will have to apply to be placed back on the ACNC register.
We are only a small charity – do we have to lodge?
The answer to this question will be based on how much revenue you take in. The ACNC has a sliding scale as to what type of review/audit you have to have done when lodging your annual return.
The scale is:
- Small charity – annual revenue is less than $250 000
- Medium charity – annual revenue is $250 000 or more, but less than $1 million
- Large charity – annual revenue is $1 million or more.
Revenue is defined as income that arises in the course of ordinary activities of a charity. Revenue can also be called sales, fees, interest, dividends or royalties. Your charity needs to calculate its revenue by using the Australian Accounting Standards (AAS), which are set by the Australian Accounting Standards Board (AASB).
For reference, see the ACNC Website http://www.acnc.gov.au/ACNC/Pblctns/Factsheets/ACNC/FTS/Fact_CharSize.aspx
Large charities must produce financial statements and have these audited by a recognised auditor. Medium charities must produce financial statements, however they have the option of either having these audited or reviewed, unless you have been directed by the ACNC to produce audited reports.
How do I decide whether to review or audit my financial statements?
If you need to make the decision whether to review or audit you financial statements you need to look at both sides of the question and decide from there. Audits can give you a higher level of assurance that the financial statements are free from material misstatement and will result in a more detailed independent examination of your records.
A review on the other hand may give you a faster turnaround but will have a limited assurance to the records that have been produced and a reduced number of documents will be looked at by the reviewer.
Either an audit or review is considered sufficient in the eyes of the ACNC (for those organisations who have this option available), however CB Audit recommend an audit be conducted where one is needed. This allows for more reliance on the reporting of the charity and also for peace of mind for the directors/responsible persons of the charity knowing that the charity has been fully audited and declared compliant.
In the next blog, we will look at the financial reporting requirements to the ACNC and what you need to do to comply with these.
Our focus is on providing a high quality service to our clients and if we can value add by facilitating greater understanding of the relevant principles and strategies to be best prepared for an audit, then we’d love to assist. We are more than happy to assist you with you reporting requirements for the ACNC. Even if you are located in a remote area, CB Audit is here to help. Please contact us to discuss any queries on 1300 CBAUDIT.
If you are not a current client and would like more information on our services, please contact Matt Williams through [email protected].