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Chartered Accountants Australia and New Zealand has developed a free guide to help members operating in the Australian not-for-profit sector. It’s a guide for charities registered with the Australian Charities and Not-for-profits Commission and will assist members detail the obligations for not-for-profits in relation to record-keeping, reporting and auditing. More information is available at charteredaccountants.com.au/ACNCguide
A guide for charities reporting under the ACNC Act 2012
A guide for charities reporting
under the ACNC Act 2012
Applicable for the first annual reporting season
commencing on or after 1 July 2013
Supplement to the Enhancing Not-For-Profit
Annual and Financial Reporting guide 2013
Section 1: The ACNC Act 2012 6
Section 2: Guidance on reporting under the ACNC Act 9
Decision 1: Do the ACNC reporting requirements apply to me? 9
Decision 2: What financial report is appropriate? 10
Decision 3: Contents of the General Purpose Financial Statements 11
Decision 4: Contents of the Special Purpose Financial Report 12
Entities registered with the
Australian Charities and Not-
for-profits Commission must
comply with the requirements
of the ACNC Act.
When the latest NFP guide was produced in 2013,
not all the regulations were finalised relating to the
Australian Charities and Not-for-profits Commission
Act 2012 (the Act). Further, additional relief
has now been granted for a charity’s first annual
The annual reporting information in the NFP
guide (Section 2 and Section 3) is still relevant and
considered best practice for charitable organisations
reporting under the Act.
Similarly, the illustrative financial statements
contained in Section 4 of the NFP guide are still
relevant for charitable organisations when they are
producing general purpose financial reports. Where
reference is made to the Corporations Act 2001 in
the illustrative financial statements, these should be
replaced by references to the ACNC Act 2012 for
This publication contains an update to some of the
legislation references relating to the Act within the
introduction of Section 4 and Table 2 in Section 5 of
the NFP guide. An updated Table 2 appears in Section
1 of this guide. The updated flow charts that are
relevant for ACNC registered charities to consider are
contained in Section 2 of this guide.
In addition to this publication, charities should
continually check for updated guidance on the
ACNC website as it continues to update its education
resources on all areas covered by the Act. Further,
the ACNC Commissioner also provides one-off relief
on the website. For example, the Commissioner has
exercised discretion to accept financial reports lodged
with state or territory governments by incorporated
associations, cooperatives or charities that undertake
fundraising or charitable collections.
At the date of this publication, the Senate Economics
Legislation Committee had concluded its inquiry into
the ACNC (Repeal (No 1) Bill 2014 with a government
report recommending the legislation to abolish the
ACNC be passed, with dissenting reports from the
Labor Party and the Greens arguing for a retention
of the ACNC.
The ACNC Repeal Bill was referred to the Senate
Economics Legislation Committee after it was
introduced in the House of Representatives in March.
One hundred and fifty five submissions were received
by the committee, with more than 80 per cent
opposing the proposed legislation.
Should this Bill be passed in the current parliamentary
sitting, it will not take effect until the enactment of
a second Bill (yet to be released). The government
intends the second Bill to contain details of the
proposed arrangements to replace the ACNC.
As a precursor to this second Bill, an options paper
has been released by the Department of Social
Services titled, Options Paper – Australia’s Charities
This means the ACNC remains Australia’s national
charity regulator and it will continue to regulate the
sector and perform its legislative functions until this
second Bill is passed by Parliament.
This publication supplements the more general not-for-profit
(NFP) guide that has been produced by Chartered Accountants
Australia and New Zealand every two years, Enhancing
Not-For-Profit Annual and Financial Reporting (NFP guide).
The ACNC Act – Record-Keeping, Reporting And Auditing
The ACNC commenced operation in December 2012. The ACNC is responsible for regulating the operations
of registered charities in Australia. All charities that were endorsed for charity tax concessions by the Australian
Taxation Office (ATO) were automatically registered with the ACNC when it commenced operations. Entities
that are registered charities with the ACNC must comply with the requirements of the ACNC Act and its
This table focuses on the financial reporting and audit requirements of the ACNC Act and associated regulations.
Section Summary Detail
55-5 Record-keeping Registered entities are required to keep written financial records that:
• Correctly record and explain its transactions and financial position and performance; and
• Enable true and fair financial statements to be prepared and audited.
Registered entities must also keep written records that correctly records its operations.
The financial records can be kept:
• In English; or
• Readily accessible and easily convertible into English.
205-25 Tiered framework A three-tiered framework exists for registered entities as follows:
• Small – Annual revenue is less than $250,000
• Medium – Annual revenue is $250,000 or more but less than $1,000,000
• Large – Annual revenue is $1,000,000 or more.
60-5 Annual information
All registered entities must prepare an annual information statement (AIS). The first AIS for
the year comprises basic non-financial information about the registered entity. These are
due for lodgement no later than 31 December unless the ACNC Commissioner has approved
a substituted accounting period or has otherwise deferred lodgement.
Medium and large registered entities must also prepare annual financial reports for financial
periods from 1 July 2013 unless they are a basic religious charity. These are due for lodgement
no later than 31 December unless the ACNC Commissioner has approved a substituted
accounting period or has otherwise deferred lodgement.
Basic religious charity A basic religious charity is defined in section 205-35 as one that:
• Is a registered entity
• Is registered with a purpose that is the advancement of religion
• Is not entitled to be registered as any other subtype of charity (i.e. does not have another purpose).
Basic religious charities cannot be:
• A body corporate registered under the Corporations Act 2001
• A corporation registered under the Corporations (Aboriginal and Torres Strait Islander) Act 2006
• A corporation registered under the Companies Act 1985 of Norfolk Island
• An entity that is incorporated under any of the relevant state or territory incorporated
• An entity that has deductible gift recipient status (except as excluded by s205-35 (3A))
• An entity that forms part of a reporting group for the year (see 60-95); or
• An entity whose total grants received from Australian government agencies in the current
financial year or either of the previous two financial years exceeds $100,000.
The ACNC Act 2012
Section Summary Detail
Requirements for annual
Where annual financial reports are required, they comprise:
• The financial statements for the year
• The notes to the financial statements
• The responsible entities’ declaration about the statements and notes.
60-15 and Reg
60.10 and Reg
The financial statements must comply with accounting standards.
The notes are the notes required by the accounting standards and any other information
necessary to give a true and fair view of the entity’s financial position and performance.
The financial statements and notes for a financial year must give a true and fair view
of the financial position and performance of the entity and comply with accounting
standards (subject to the transitional relief noted below).
Where special purpose financial statements are prepared the following minimum
accounting standards must be applied:
• AASB 101 Presentation of Financial Statements
• AASB 107 Statement of Cash Flows
• AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors
• AASB 1031 Materiality
• AASB 1048 Interpretation of Standards
• AASB 1054 Australian Additional Disclosures.
Reg 60.20 – 25
Reg 60.35 to 40
60-E and 60-G
Transitional relief in
respect of compliance
For an entity that was not required to prepare a financial report complying with accounting
standards in respect of the 2012/13 financial year and did not prepare such a statement then
the financial statement can comprise the financial information section within the 2014 AIS.
But this financial information must still be reviewed or audited as per below.
Compliance with accounting standards is not required if they conflict with the requirements
of sub-divisions 60-E or 60-G of the ACNC Act in respect of joint or collective reporting and
additional reporting requirements.
Under the collective or joint reporting provisions, groups of charities that meet certain criteria
can apply to the ACNC to prepare a combined set of financial reports that incorporate all the
financial activities of a group
• Joint reporting – two or more registered charities that form a reporting group are allowed
to prepare and lodge a single information statement or a single information statement and
a single financial report
• Collective reporting – two or more registered charities that form a reporting group are
allowed to prepare and lodge one or more information statements or one or more single
information statements and one or more single financial reports, other than on an entity
by entity basis.
Reg 60-15 Responsible entities’
The declaration must state:
• Whether the registered entity is able to pay its debts as and when they become
due and payable; and
• Whether the financial statements and notes satisfy the requirements of the Act.
Medium-sized registered entities must have their financial reports audited or reviewed.
Large registered entities must have their financial reports audited.
Section Summary Detail
Audits can be undertaken by:
• A registered company auditor (RCA) as defined under the Corporations Act
• A firm with at least one member of which is a RCA who is ordinarily a resident in Australia
• An authorised audit company as defined under the Corporations Act.
Reviews can be undertaken by:
• Those suitable to provide audits (as above); or
• A member of one of the three accounting bodies (Chartered Accountants Australia and
New Zealand, CPA Australia or Institute of Public Accountants).
The audit or review must be undertaken in accordance with auditing standards.
An independence declaration is required.
The report must consider in respect of the financial report:
• Compliance with Division 60 of the Act
• Quantify the effect of any non-compliance if practicable (or state why not possible)
• Describe any material defect or irregularity and any deficiency, failure or shortcomings
in respect of:
– whether all information and assistance has been provided
– whether financial records are sufficient
– whether other records as required have been kept
• Compliance with statement or disclosures required by auditing standards.
60-65 Errors in information
When a registered entity identifies a material error in a lodged information statement or
financial report it must give a corrected statement to the ACNC Commissioner as follows:
• Small registered entities: within 60 days after the entity identifies the error
• Medium or large registered entities: within 28 days after the entity identifies the error.
Decision 1: Do the ACNC Reporting Requirements apply to me?
Section 2: Guidance on reporting
under the ACNC Act
There may be other current reporting requirements to consider imposed by states/territories
and/or other Commonwealth laws, regulations and/or regulators (e.g. ATO/ASIC).
Start here REGISTERED CHARITY WITH THE ACNC/ATO? 1
AIS required – this includes non-financial information for the first
financial year. Those charities that are not BRCs (see below) will
have to provide the ACNC with financial information in the AIS for
subsequent financial years.
Is the entity a Basic Religious Charity (BRCs)? 2
Financial report required in accordance with accounting standards 3
Is the entity a reporting entity? See Decision 2
Responsible entity declaration to be prepared
1. Registration with the ACNC is voluntary and allows access to Commonwealth tax concessions and other benefits otherwise unavailable. Any organisation that was registered
as a charity with the ATO should have become a registered charity under the ACNC Act 2012, unless they have opted out or become unregistered since December 2012.
2. Basic Religious Charity comprise Religious entities that have the sole purpose of advancing religion and are not; a deductible gift recipient (unless it is only one for the
operation or one or more funds, authorities or institutions with a combined revenue of less than $250,000), or received a financial grant from the Australian government in
the current or previous two financial years exceeding $100,000, or a body corporate under one of the corporations/companies acts, or an incorporated association or part of a
reporting group under the proposals according to s205-35 of the ACNC Act 2012.
3. The exception to this is whether the transitional relief is met contained in Reg 60-20 – 60-25 and Reg 60.35 – 60.40.
General Purpose Financial
See Decision 3
Special Purpose Financial
See Decision 4
Is revenue less than $250K?
Decision 2: What financial report is appropriate?
The financial report produced in most cases must be in compliance with accounting standards. Statement of Accounting
Concept 1 Definition of a reporting Entity (SAC 1) and Statement of Accounting Concept 2 Objective of General Purpose
Financial Reporting (SAC 2) issued by the Australian Accounting Standards Board (AASB) set out the detailed
consideration as to whether an entity can prepare a general purpose financial report (GPFR) or a special purpose
financial report (SPFR). See the decision tree below to help assist the Board/Governing Body in its determination.
– go to Decision 3
Special purpose financial
report may be prepared
– go to Decision 4
operate Australia wide
The whole management team is
employed with little volunteer
involvement; professional workforce
involved in delivery of services
or running day-to-day activities;
governing Board includes
‘outsiders’ with specific skills.
Significant community impact
and/or representing a number of
communities or affiliated bodies.
If most of your responses
fall on this side of the
decision tree, you are most
likely a reporting entity.
Few stakeholders, operate
in a limited geographic area
(for example, in one suburb
or a country town).
In answering this question you
need to consider donors, sponsors
volunteers, staff, the public, grant
providers, regulators, suppliers,
program beneficiaries, interest
groups and affiliated bodies.
The NFP is managed by
the stakeholders, including
volunteers or a small
management team is employed
and supplemented by volunteers;
activities conducted by
volunteers; governed by
a Board of volunteers.
Impact limited to a specific
community and one group
within that community.
If most of your responses
fall on this side of the
decision tree, you may
be a non-reporting entity.
Is the NFP in receipt
of government or
and/or reliant on
Widespread How widespread are
Is management separated
Who are your
Does the NFP have a
significant impact on the
broad community or
represent a broad group?
(Consider the activities and
Decision 3: Contents of the General Purpose Financial Statements
General purpose financial report – Australian Accounting
Standards, reduced disclosure requirements
Full Tier 1 general purpose financial
report – compliance with all recognition,
measurement and disclosure requirements
of the Australian Accounting Standards.
Does your NFP want to elect to take advantage of the reduced
disclosure regime (RDR) available under AASB 1053?
Does the NFP’s constitution prevent
the use of an RDR?
Record Board/governing body resolution regarding decision to elect to adopt Tier 2 reduced
disclosure requirements and disclose the adoption in the notes to the financial statement.
Apply all recognition and measurement requirements from the Australian Accounting Standards.
Review the disclosures permitted to be removed and decide which will not be included.*
Add any additional disclosures if relevant for the compliance with:
• Any applicable fundraising legislation
• The Australian Council for International Development (ACFID) code
(see NFP guide, Section 5.3 for more information).
* Note: The reduced disclosure standards show all disclosures that are no longer required in the financial statements. Entities may
choose to remove all of these disclosures or only some of them, subject to any true and fair requirement in respect of the financial
statements in relevant legislation.
Once the entity removes any disclosures permitted under this regime, the financial statements are deemed to be prepared in
accordance with the Australian Accounting Standards, reduced disclosure requirements.
Decision 4: Contents of the Special Purpose Financial Report
1. Registered charities must comply with the following minimum accounting standards, as determined by the law:
AASB 101 Presentation of Financial Statements
AASB 107 Statement of Cash Flows
AASB 108 Accounting policies, Changes in Accounting Estimates and Errors
AASB 1031 Materiality
AASB 1048 Interpretation of Accounting Standards
AASB 1054 Australian Additional Disclosures
SPECIAL PURPOSE FINANCIAL REPORT
Determine the accounting framework to be used,
ensuring it meets the needs of those identified users.
Consider any additional requirements of other State/territory legislation and/or the
entity constitution/charter/trust deed.
This will include:
• Mandatory accounting standards applicable for registered charities under the
• Consideration of other accounting standards necessary (recognition, measurement
and disclosure) to give a ‘true and fair’
• Consideration of requirements of other State/territory legislation and/or the entity
Add any additional disclosures, if relevant, for the compliance with:
• Any applicable fundraising legislation
• ACFID code (See NFP guide, Section 5.3).
Record Board resolution documenting the assessment that the entity is not a reporting
entity, the accounting framework used in the preparation of the financial statements and
the appropriateness of the framework to the needs of users.
Ensure the basis of preparation note included in the financial statements provides details
of compliance with accounting standards.
Chartered Accountants Australia
and New Zealand
33 Erskine Street, Sydney NSW 2000,
GPO Box 9985, Sydney NSW 2001, Australia
Phone 1300 137 322 or +61 2 9290 5660
Fax +61 2 9262 4841
Level 7, Chartered Accountants House,
50 Customhouse Quay, Wellington 6142,
PO Box 11342, Wellington 6142, New Zealand
Phone +64 4 474 7840 or 0800 469 422
Fax +64 4 473 6303