Charity Size Threshold Changes That May Affect Your Organisation
In an effort to reduce the burden of reporting for charities, the Australian Charities and Not-for-Profits Commission (ACNC) has introduced new thresholds for financial reporting. This update means that for some charities, the requirement to produce a financial report is no longer applicable, and for others that the financial report may be subject to a review instead of an audit. Ultimately, this new threshold will free up time, effort and resources for many charities, allowing them to focus on their work supporting millions of people nationwide.
These changes will come into effect on 1 July 2022 upon the submission of 2022 Annual Information Statements which will cover the 1 July 2021 - 30 June 2022 period. It is essential for all charity leaders to speak with their accountants as soon as possible to understand the appropriate requirements and processes they need to undertake.
Responsibility for charities to report financial information is dependent on whether they are small, medium or large, determined by their yearly income. Detailed below are the obligations for each charity size and what you can expect.
Small Charity
Current threshold: Less than $250,000
New threshold: Less than $500,000
Requirements: Complete Annual Information Statement online.
It is not compulsory to submit a financial report with the Annual Information Statement as the ACNC has not outlined a condition for a small charity to have its reports evaluated or audited. While it is not compulsory, Maher Group encourages small charities to submit a financial report as part of the Annual Information Statement as it helps to maintain, protect and enhance public trust and confidence in the sector through increased accountability and transparency.
Medium Charity
Current threshold: $250,000 - $999,999
New threshold: $500,000 - $2,999,999
Requirements: Financial reports can be reviewed or audited.
Mid-sized charities have the option to have their reports reviewed or audited. The reviewer or auditor’s report must be submitted as part of the financial report with the Annual Information Statement. The audit or review must be conducted by:
A registered company auditor; or
An audit firm; or
An authorised audit company.
Alternatively, a review may be conducted by a current member of CPA, CAANZ or IPA who is qualified to do so in line with the Corporations Act 2001.
Large Charity
Current threshold: $1,000,000+
New threshold: $3,000,000+
Requirements: Financial report must be audited.
Large charities need to undertake compulsory action to have their financial reports audited and included in the financial report as part of the Annual Information Statement. Audits must be conducted by:
A registered company auditor; or
An audit firm; or
An authorised audit company.
These are the ACNC conditions for financial reports. Other agencies or details in the charity’s governing document may stipulate different requirements which must be considered when preparing the financial report.
Instead of an audit simply being a tick-the-box compliance exercise, the team at Maher Group work closely with you to understand your business and extract value through strategic information to assist in decision making. Contact us today and we’ll transform the often mundane annual audit process into a mechanism to deliver commercial insights to help your organisation succeed.