INTHEBLACK April 2022 - Magazine - Page 8
AT A G L A N C E
GET SMART
// C PA A U S T R A L I A P O L I C Y
APRIL
UPDATE
Ram Subramanian
CPA Australia’s senior
manager, reporting policy
In line with new
regulations, financial
reporting thresholds have
been raised for charities
registered with the
Australian Charities and
Not-for-profits
Commission (ACNC).
The changes should see
several smaller charities
exempted from the
requirement to prepare
and lodge financial
reports with the ACNC.
REDUCING THE
REPORTING BURDEN:
NEW REGULATIONS
A SET OF NEW REGULATIONS FOR CHARITIES, APPLICABLE FROM JUNE 2022, SIGNALS
A DECREASE IN THE REPORTING BURDEN, PARTICULARLY FOR SMALLER CHARITIES.
F
inancial reporting thresholds have been raised for
charities registered with the Australian Charities
and Not-for-profits Commission (ACNC), which
should see many smaller charities exempted from
the obligation to prepare and lodge financial reports
with the ACNC.
The changes were introduced by the Australian
Charities and Not-for-profits Commission Amendment
(2021 Measures No. 3) Regulations 2021 (the
regulations) and will affect financial reporting periods
ending 30 June 2022 onwards.
In addition to the increase in thresholds for financial
reporting, new reporting requirements have been
introduced for some charities that prepare and lodge
special purpose financial statements (SPFS). They are
the disclosure of remuneration paid to key management
personnel (KMP) and related-party transactions.
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8 ITB April 2022
KMP REMUNERATION
For accounting periods ending 30 June 2022 onwards,
large charities with two or more KMP must disclose KMP
remuneration in accordance with the requirements in
either AASB 1060 General Purpose Financial Statements
– Simplified Disclosures for For-Profit and Not-for-profit
Tier 2 Entities or AASB 124 Related Party Disclosures.
If a large charity has only one KMP who is an
individual, disclosure of remuneration paid to that
individual is not required. However, if amounts are
paid to obtain KMP services from another entity (a
management entity), then disclosure of remuneration
paid to the management entity is required, as that
entity is not considered an “individual” for the
purposes of the regulations.
RELATED-PARTY TRANSACTIONS
From the year ending 30 June 2023 onwards, both
medium-sized and large charities will also be required
to disclose transactions with related parties, in
accordance with either AASB 1060 or AASB 124.
Mel Yates FCPA, director for reporting, red tape
reduction and ACNC corporate services, notes that
the regulations provide no transitional relief from the
disclosure of comparatives for KMP remuneration and
related-party transactions.
However, to avoid any unnecessary burden on
charities subject to the new disclosure requirements, the
ACNC commissioner has exercised discretion within his
powers to not require comparative disclosures for these
items in the first year of disclosure.
“It is unreasonable to require charities to report
comparative information from the 2021-2022 reporting
period without having had in place the systems,
processes and controls to record and report the
transactions during that time,” says Yates.
This concession will mean that large charities required
to disclose remuneration paid to KMP in the first year to
30 June 2022 will not be required to disclose
comparative information for the year to 30 June 2021.
Similarly, medium and large charities will only need to
disclose related-party transactions in the first applicable
year, that is, to 30 June 2023, and will not have to
disclose the related-party transactions for the
comparative year to 30 June 2022.
Although small charities (annual revenue below
A$500,000) are not required to prepare and lodge
financial reports, the ACNC will require some simplified
disclosure of related-party transactions in the Annual