Charities need to be mindful of their 2014 financial reporting obligations

Charities need to be mindful of their 2014 financial reporting.

Penalties ahead for not-for-profits that fail to comply.

With the legislation to abolish the Australian Charities and Not-for-profits Commission (ACNC) still in abeyance, all charities registered with the ACNC are reminded that they must ensure that they continue to comply with their statutory requirements or risk penalties.

This includes reporting obligations that arise for the 2014 reporting period, with the type and amount of information required to be reported by charities dependent on factors including the size of the charity.

What do you have to do?

Small charities (annual revenue <$250k) are not required to prepare and lodge financial reports. However, they are required to provide limited financial information through the 2014 Annual Information Statement.

Medium charities (annual revenue of $250k or more but less than $1m) and large charities (annual revenue of $1m or more) with 30 June 2014 year-ends are required to prepare and lodge financial reports with the ACNC by 31 December 2014 (reviewed or audited for medium charities and audited for large charities).

Charities with a year ending after 30 June 2014 will have six months after their year-end date to prepare and lodge their financial reports. Medium and large charities are also required to provide limited financial information through the 2014 Annual Information Statement.

Transitional arrangements

There are a number of transitional financial reporting arrangements for medium and large charities.

To summarise:

  • For the 2014 year, if a charity is an incorporated association, a cooperative or a charitable fundraising organisation and is already preparing and lodging financial reports with a state/territory regulator, the ACNC has announced that it will accept the lodgment of that same financial report to satisfy the charity’s obligations for an ACNC financial report.
  • A charity has the option to not prepare and lodge financial statements that comply with Australian Accounting Standards for 2014, if:

- It was not required under an Australian law (Commonwealth, state or territory) to prepare financial reports in 2013 that complied with Australian Accounting Standards, and

- It did not in fact, prepare a financial report in 2013 that complied with, or purported to comply with Australian Accounting Standards.

Charities that qualify and choose not to prepare and lodge financial statements prepared in accordance with Australian Accounting Standards are still required to:

  • Provide the ACNC with financial statements that include the same financial information required within the 2014 Annual Information Statement (does not have to be prepared in accordance with Australian Accounting Standards AND can be cash or accruals based)
  • Subject the financial information to an audit (large charities) or review or audit (medium charities)
  • Provide a responsible entities’ declaration

Until 2015, the ACNC Commissioner has discretion under legislation to treat a charity as having met its annual reporting obligations to the ACNC if the charity is already complying with reporting obligations to another Australian Government agency.  This discretion is subject to conditions set out in the ACNC Commissioner’s policy statement.

See the ACNC website for more information on the transitional arrangements. 

For further details on the reporting parameters, see Charities: A guide to financial reporting and assurance requirements (PDF).

Ram Subramanian is CPA Australia’s policy adviser – reporting and audit