Following on from our July 2021 Accounting News article, on 20 September 2021, the Government published its Exposure Draft to give effect to Recommendations 12, 14 and 15 of the Australian Charities and Not-for-Profits Commission Legislative Review. The consultation period for the proposed changes to the Australian Charities and Not-for-profits Commission Regulation 2013 (Regulations) closed on 8 October 2021. The table below summarises the areas for change, as well as when they will be effective.
| Recommendation | Proposal | Proposals to take effect for the first time |
| 12 | Increase revenue thresholds | 30 June 2022 financial years and later (2022 Annual Information Statement1) |
| 14 | Related party disclosures for medium and large charities | 30 June 2023 financial years and later (2023 Annual Information Statement1) |
| 15 | Key management personnel compensation for large charities | 30 June 2022 financial years and later (2022 Annual Information Statement1) |
| 1: Annual Information Statement = AIS in the remainder of this article | ||
It is anticipated that the proposed increases in revenue thresholds will result in approximately 2,500 registered charities no longer being required to produce financial reports at all, and more than 2,700 charities will be allowed to have their financial reports subject to a review instead of an audit. The table below compares the old and new revenue thresholds for determining whether your charity is small, medium or large for financial reporting purposes.
| Size of charity | Current revenue thresholds for the 2021 AIS | Revenue 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 increased reporting thresholds will apply to years ending 30 June 2022 or later (i.e. for the 2022 AIS).
Registered charities submitting general purpose financial statements to the Australian Charities and Not-for-Profits Commission (ACNC) will automatically include all relevant related party disclosures required by AASB 124 Related Party Disclosures. However, if preparing special purpose financial statements (SPFS), these disclosures are currently not required. To improve transparency, the proposed amendments to the Regulations therefore include AASB 124 as one of the mandatory standards that entities must comply with when preparing SPFS.
Details of related party transactions will be mandatory for all medium and large registered charities (i.e. with revenue of $500,000 or more) for years ending 30 June 2023 or later (i.e. for the 2023 AIS).
Despite the above proposals to require disclosure of related party transactions under AASB 124 for all medium and large charities, it was recommended that only large charities with two or more key management personnel (KMPs) be required to disclose compensation for key management personnel, and then only in aggregate.
Details of KMP compensation will be mandatory for years ending 30 June 2022 or later (i.e. for the 2022 AIS).
Please refer to the Frequently Asked Questions (FAQs) that accompany the Exposure Draft for more information on these changes.
Please contact one of our NFP Advisory Partners or our IFRS Advisory team if you requires assistance applying these changes or with any other NFP financial reporting matters.