Raising ideas for charity regulation

The ACNC had a broad mandate that includes supporting and sustaining the sector, and cutting significant regulatory burden faced by providers.

While the Australian Charities and Not-for-profits Commission has come a long way in its five-year existence, Ram Subramanian believes further good can be done.

The establishment of the Australian Charities and Not-for-profits Commission (ACNC) on 3 December 2012 heralded a new national regime for Australian charity regulation. Since the commission’s inception, CPA Australia has remained a strong supporter of the ACNC and a federated model of charity and, ultimately, not-for-profit regulation.

From the get-go, the ACNC had a broad mandate that includes supporting and sustaining the sector, and cutting significant regulatory burden faced by providers. Much has been achieved in these areas, but there is scope for improvement. CPA Australia’s submission in response to the fifth anniversary review of the ACNC legislation provides commentary on where and how improvements could be achieved.

The fundraising factor

Although conceived as a regulator for the entire not-for-profit sector, the ACNC’s remit was initially restricted to oversight of the charities sector. In our view, this restricted scope remains appropriate at present, although some consideration could be given to extending the ACNC’s scope over fundraising regulation, currently vested in state and territory regulators. 

Reducing red tape

Considerable progress has been achieved in red tape reduction, however this should remain a priority of the ACNC for the foreseeable future. Regulatory duplication in reporting and other requirements persists in both Commonwealth and state/territory laws governing charities. Hotspots of red tape that need immediate attention include incorporated associations legislation in some states and territories, compliance with fundraising regulation, and grant acquittals to Commonwealth agencies.

Professional Development: Reporting standards and disclosures in the NFP sector: this course covers the most commonly used Australian Accounting Standards for not-for-profit entities.

Improving governance

The ACNC’s five governance standards continue to provide a suitable framework to enable good governance among charities. We recommend some improvements to reinforce the responsibilities and obligations of both charities and their directors or other board members. 

Transparency remains an essential feature of good charity governance, but this is somewhat hampered by the secrecy provisions currently encoded in the ACNC legislation. CPA Australia recommends consideration be given to amending those parts of the legislation, to allow the ACNC to disclose specific information on charities’ regulatory activities.

The cost of compliance

Charity reporting requirements are critical to maintain public trust and confidence in the sector, however this needs to be carefully balanced against the costs charities incur in complying with their reporting obligations. There is a clear need to get the cost-benefit balance right, and CPA Australia’s submission identifies the current areas of concern and suggestions as to how these could be addressed. 

Consideration should be given to raising the thresholds for financial reporting, significantly improving the financial reporting framework charities must adopt in preparing financial statements and improving the applicable audit and assurance provisions.

The Australian Parliament will consider the review recommendations in the coming months and we will continue to engage with government policymakers and other stakeholders to ensure the best outcomes are achieved for the sector, our members, and the wider public.

Stay in touch

The CPA Australia policy team welcomes your feedback and comments. Visit the policy page at cpaaustralia.com.au/policy for more details about our submissions, plus information about open consultations and the latest policy bulletins and newsletters.

Read next: Why charities and not-for-profits need accountants

October 2021
October 2021

Read the October 2021 issue of INTHEBLACK magazine.

Each month we select the must-reads from the current issue of INTHEBLACK. Read more now.