In February 2021, the Australian Government and State Treasurers issued a consultation paper titled ‘Increasing financial reporting thresholds for ACNC – registered charities’. The paper proposed increasing the reporting thresholds for small, medium and large charities.

Charities registered with the Australian Charities and Not-For-Profits Commission (ACNC) are classified by their size. This is based on the charity’s annual revenue and determines the reporting requirements to the ACNC. Revenue is a component of total income, where Revenue + Other Income = Total Income.

The following changes have been approved and will take effect from the 2021-22 financial year:

Charity Size	ACNC reporting requirements	Current revenue threshold	New revenue threshold
Small	Annual Information Statement	Less than $250k	Less than $500k
Medium	Annual Information Statement reviewed or audited financial report	$250k to $1m	$500k to $3m
Large	Annual Information Statement and audited financial report	More than $1m	Greater than $3m

The changes are aimed to balance a reduction in regulatory compliance with maintaining transparency and promoting accountability, public trust and confidence in the sector.

Effect of changes

You should determine if the changes to the thresholds result in your organisation changing classification, and if so, consider the impact on the financial reporting requirements. You may no longer need to have your financial reports reviewed or audited. The main differences between an audit and a review are:

	Audit	Review
Positives	– Provides higher level of assurances – Higher level of examination of financial report based on greater detail and evidence.	– Typically cheaper than an audit – Quicker than an audit.
Negatives	– Greater cost – Typically takes more time.	– Provides a lower level of assurance – Lower level of examination of the financial report.

Charities that no longer require an audit for ACNC purposes should ensure that a review will provide it with the level of assurance that best suits its circumstances and complies with its governing documents (e.g. constitution), contracts (funding agreements, lending agreements) and any other applicable regulatory requirements.

Consumer Affairs Victoria is yet to make an announcement about aligning its financial reporting requirements for Incorporated Associations with the changes introduced for charities. We will update you when more information is available.

Additional reporting

Large charities with two or more key management personnel will be required to report remuneration paid to responsible persons on an aggregated basis from the 2022 Annual Information Statements.

From 1 July 2023, all charities will be required to report related party transactions in the Annual Information Statement.

AFS remain up-to-date with any changes to financial reporting requirements for registered charities so that we can assist your charity to ensure such reporting requirements are met. If you would like to know more about the services we offer to Not-For-Profits see our industry page: afsbendigo.com.au/not-for-profits

If you have any questions regarding the new requirements or how your organisation is affected, please contact Amy Alexander on 03 5443 0344 or email afs@afsbendigo.com.au