Fewer charities required to prepare financial reports in future

In an exciting development for charities registered with the Australian Charities and Not-for-profits Commission (ACNC), the Government is set to cut red tape and reduce the reporting and compliance burden of charities for their 2021-2022 financial reporting, i.e. for the 2022 and later Annual Information Statements (AIS). This will enable smaller charities to focus more of their resources (time and money) to help vulnerable Australians.

The mechanism for reducing this burden is increasing the reporting thresholds for medium and large charities as shown in the table below:

Size of charity

Current revenue thresholds for the 2021 AIS

Thresholds from 1 July 2022 for the 2022 AIS

Audit / review requirement?

Small

Less than $250,000

Less than $500,000

None

Medium

$250,000 - $1 million

$500,000 - $3 million

Review or audit

Large

Greater than $1 million

Greater than $3 million

Audit

The above changes are part of the Government’s response to Recommendation 12 of the ACNC Legislation Review (Review).

However, in response to Recommendation 14 and 15 of the Review, the Government will also enhance (increase) charities’ reporting obligations to provide greater accountability to donors, beneficiaries and the public as follows:

  • Key management personnel (KMP) remuneration (in aggregate) – details will be required for large charities with two or more KMPs in the 2022 and later AIS
  • Related party transactions – disclosures will be required for all charities in annual reports for their 2022-2023 financial reporting, i.e. for the 2023 and later AIS. This information will increase transparency of transactions with related people or organisations that pose a higher risk of conflicts of interest.

We will include more information in future editions of Accounting News when these legislative changes have been made.

Subscribe to Accounting News

SUBSCRIBE

This publication has been carefully prepared, but is general commentary only. This publication is not legal or financial advice and should not be relied upon as such. The information in this publication is subject to change at any time and therefore we give no assurance or warranty that the information is current when read. The publication cannot be relied upon to cover any specific situation and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact the BDO member firms in Australia to discuss these matters in the context of your particular circumstances.

BDO Australia Ltd and each BDO member firm in Australia, their partners and/or directors, employees and agents do not give any warranty as to the accuracy, reliability or completeness of information contained in this article nor do they accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based on it, except in so far as any liability under statute cannot be excluded. Read full Disclaimer.