With the end of the financial year, it is the responsibility of the governing body (Board or Committee) of your not-for-profit (NFP), to consider the regulatory reporting obligations that the NFP is required to meet.
Australian Charities and Not-for-profits Commission (ACNC) Registered Entities
Your NFP's financial reporting and other obligations to the ACNC depend on whether it is considered a small, medium or large NFP.
Under reforms agreed to by the Council on Federal Financial Relations, financial reporting thresholds for small and medium sized NFPs registered with the ACNC will be lifted. And will take effect from 1 July 2022. The move will affect more than 5000 charities.
|
Entity Size |
Current annual revenue threshold |
New annual revenue threshold |
|
Small |
Less than $250,000 |
Less than $500,000 |
|
Medium |
$250,000 or more and less than $1 million |
$500,000 or more and less than $3 million |
|
Large |
$1 million or more |
$3 million or more |
The size of your NFP, and therefore your reporting requirements, is based on its total annual revenue for the period upon which it is reporting. Revenue is only a component of total income (Revenue + Other Income = Total Income).
Revenue is realised from the sale of goods or services, or through the use of capital or assets. Revenue can also arise from the contribution of an asset to a NFP when certain conditions have been met during the NFP's ordinary activities.
|
Entity Size |
Annual information statement |
Annual financial report |
Basis of accounting |
Type of financial statement |
Review or audit |
|
Small |
Required |
Optional |
Cash or accrual |
Small charities can choose to submit a financial statement. The type of financial statement can be the same as a medium or large NFP |
No ACNC obligation |
|
Medium |
Required |
Required |
Accrual |
· Special purpose financial statement (if not a “reporting entity”) or · General Purpose Financial Statement – Reduced/Simplified Disclosure Requirements (Tier 2) or · General Purpose Financial Statement – Full (Tier 1) |
The ACNC requires your financial reports to be either reviewed or audited |
|
Large |
Required |
Required |
Accrual |
The ACNC requires your financial reports to be audited |
If you are a medium sized entity, to determine if financial reports need to be reviewed or audited, you must consider your constitution, governing document or grant funding agreements as they may explicitly state which one is required.
For ACNC registered small entities, and those that are not ACNC registered, the reporting obligations is dependent on whether it is structured as an incorporated association or company limited by guarantee.
Incorporated Associations
All incorporated associations must record and explain the transactions of the association and their financial position. Prescribed associations (gross receipts of more than $500,000) need to lodge annual audited financial statements. If the incorporated association is not a registered NFP, lodge with Consumer and Business Services (CBS).
If the incorporated association has gross receipts less than $500,000, then you need to consider your constitution, governing document or grant funding agreements as they may explicitly state which if an audit or review is required or not.
Company Limited by Guarantee
A company limited by guarantee (CLG) is registered with the Australian Securities and Investments Commission (ASIC). There is no reporting obligation to ASIC as it is more than likely to be defined as a ‘small company’ under the Corporations Act (revenue less than $50 million and gross assets less than $25 million). Therefore, you will need to consider your constitution, governing document or grant funding agreements as they may explicitly state which if an audit or review is required or not.
If you have any questions in respect to your regulatory NFP Reporting requirements, please contact the team at Lee Green.
This information is current at the time of publication and further updates may have occurred since that date. Please contact us for the latest information.
