Following the Royal Commission into the National Natural Disaster Arrangements, the state and federal governments have prioritised easing the burden on many charities registered with ACNC. The Royal Commission findings reflects how charities are currently faced with costly financial reporting obligations (often to multiple State and Federal agencies), and recommends the complexity of reporting obligations be reduced.
The independent review of the ACNC legislation (Strengthening for Purpose: Australian Charities and Not-for-profits Commission Legislation Review 2018) made 30 recommendations. The Council of Federal Financial Relations, in response to the report, has announced it has committed to develop a framework by mid-2021 to lift financial reporting thresholds. We await this release for more clarity on which entities will see the easing of regulatory requirements and how they will be affected.
A federal treasury statement projected that “Over 3,000 charities will no longer need to produce reviewed financial statements, saving each charity around $2,400 in accounting expenses annually. In addition, approximately 2,000 charities will no longer be required to produce audited financial statements saving around $3,000 annually.”
What does this mean for your charity?
These changes may or may not impact your charity, depending on your circumstances. Charities will still need to consider their financial reporting obligations under their governing instrument such as trust deed or constitution, which may still require financial reporting above and beyond the regulatory requirements and consider whether their reporting practices could be amended.
However until the framework is released no immediate action is required. We will be sure to keep you updated as more information is made public. If you have any questions about your current reporting obligations, please speak with our not-for-profit specialists Reece Jory or Darren Laarhoven.