INTHEBLACK April 2022 - Magazine - Page 9
New remunerationrelated reporting
requirements have also
been introduced for
some charities that
prepare and lodge
special purpose
financial statements.
Information Statement (AIS) from periods ending
30 June 2023. Details of what disclosures should be
made and guidance to assist with compliance have been
developed by the ACNC for key management personnel
remuneration disclosures and considerations on
standards and financial reporting. Yates observes that
“the requirement will be set out in plain English,
sufficiently simplified and tailored for small charities with
accompanying guidance on how to comply as well”.
DEFINITION OF REVENUE
Since charity size is determined by annual revenue,
charities will have to refer to Australian Accounting
Standards in determining what constitutes revenue.
“Recently, there has been some confusion around how
charities should be classifying revenue,” says Yates. “The
regulations are clear, all relevant accounting standards
should be applied including AASB 15 and AASB 1058 in
determining a charity’s annual revenue.”
Revenue is defined in AASB 15 Revenue from Contracts
with Customers as “Income arising in the course of an
entity’s ordinary activities”. Revenue that meets this
definition can arise not just from income transactions
relevant to AASB 15, but also from other accounting
standards such as AASB 1058 Income of Not-for-Profit
Entities and AASB 9 Financial Instruments as well. For
example, grant income that is recognised under AASB
1058 or interest income recognised under AASB 9 may
“arise in the course of an entity’s ordinary activities” and
therefore needs to be considered as revenue for both
accounting and size determination purposes.
“Accounting professionals supporting charities should
assist them in applying all relevant accounting standards
to identify revenue for size determination purposes,”
says Yates. The ACNC has developed guidance to assist
charities and their advisers.
PROGRAM INFORMATION
The regulations also bring in a new reporting feature
that allows charities to voluntarily disclose information
to the ACNC for the purpose of being included on the
ACNC Charity Register.
Currently, charities provide program information
annually in the AIS, but this new feature will allow
charities to more frequently update their web page on the
ACNC Charity Register with any new information relating
to program activities they undertake during the year.
“A charity organising efforts to assist with bushfire
recovery or responding to flood damage can provide
information on their activities so that donors seeking to
assist with such natural disasters can make an informed
decision based on what’s disclosed on the ACNC
Register,” says Yates.
RED TAPE REDUCTION AGENDA
The new thresholds and reporting requirements were
established following recommendations made by an
independent panel tasked by the Australian Government
with reviewing the ACNC legislation. Although the
independent review panel recommended higher
thresholds (annual revenue above A$1 million for medium
charities and above A$5 million for large charities), the
final size thresholds were arrived at following
negotiations with states and territories through the
Council on Federal Financial Relations (CFFR).
The buy-in from states and territories has meant that
charities currently exempt from other state/territory or
Commonwealth financial reporting requirements under
streamlined reporting arrangements can continue to
enjoy those exemptions provided they continue to
comply with the ACNC financial reporting requirements.
Notably, however, there have been no corresponding
changes in financial reporting thresholds or
requirements for not-for-profits that are not ACNC
registered charities, including companies limited by
guarantee and incorporated associations.
Yates notes that the states, territories and the
Commonwealth have worked together to arrive at these
new thresholds.
“The independent review recommendations were
higher, but this was the middle ground reached based
on the CFFR negotiations between all jurisdictions and
will benefit charities while maintaining transparency.”
Small charity
Medium-sized charity
Large charity
Current thresholds
(based on annual revenue)
Less than A$250,000
A$250,000 to less than
A$1 million
A$1 million and above
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CPA Australia’s
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New thresholds
(based on annual revenue)
Less than A$500,000
A$500,000 to less than
A$3 million
A$3 million and above
intheblack.cpaaustralia.com.au April 2022 9