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21RU-006 ACNC reporting threshold increase

21RU-006 ACNC reporting threshold increase

On 22 February 2021 the government released a consultation paper outlining proposals to increase the annual revenue thresholds for determining the financial reporting requirements for Australian Charities and Not-for-profits Commission (ACNC)-registered charities.

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Proposed changes to annual revenue thresholds

The consultation paper, Increasing financial reporting thresholds for ACNC-registered charities, is in response to recommendations included in the report released in response to the ACNC Act Legislative Review: Strengthening for Purpose: Australian Charities and Not-for-profits Commission Legislative Review 2018. To reduce the regulatory burden on charities, one of the recommendations was to increase the financial reporting thresholds.

The tables below detail the proposed changes to the annual revenue threshold for ACNC-registered charities to determine charity size, and the consequential minimum financial reporting requirements.

Proposed thresholds and requirements

Charity size Annual revenue threshold ACNC Reporting requirements
Small < $500,000
ACNC Annual Information Statement
Medium ≥ $500,000 < $3 million
Annual Information Statement and reviewed financial report
Large ≥ $3 million Annual Information Statement and audited financial report

Current thresholds and requirements

Charity size Annual revenue threshold ACNC Reporting requirements
Small < $250,000
ACNC Annual Information Statement1
Medium ≥ $250,000 < $1 million
Annual Information Statement and reviewed or audited financial report
Large ≥ $1 million Annual Information Statement and audited financial report
  1. Although basic religious charities are required to submit an Annual Information Statement, they are not required to provide financial reports, regardless of size.

The consultation paper also sets out and discusses the benefits, rationale and challenges to implementing the proposed increase in annual revenue thresholds. These are discussed further in the PDF version (154 KB) of our Reporting Update.

Feedback and comments are sought through six consultation questions. Submissions close on 21 March 2021.

“The proposed increases in reporting thresholds do not go as far as the recommendations coming out of the ACNC Act Legislative Review, as the government has indicated it is trying to balance regulatory burden and the need to promote transparency and accountability in the sector, which some preparers may find disappointing. It is therefore important to comment to the government on these proposed threshold changes where you have a view.”

Kim Heng
Partner, Department of Professional Practice

Type of financial report to be prepared

The consultation paper does not address the basis of preparation of any financial report required to be prepared by medium or large charities.

Currently the ACNC requires charities to determine whether they are a “reporting entity” (under the existing not-for-profit financial reporting framework) and prepare general purpose or special purpose financial statements, as appropriate. The AASB has a project to develop a new financial reporting framework for all not-for-profit private sector entities that is to be progressed in the latter part of 2021.

It is expected that any change to the guidance on the type of financial report to be prepared will be developed as part of this project. It is the AASB’s preference that the regulator set the requirements for each charity size once the new financial reporting framework is finalised. The interplay on the type of financial report to be prepared and the size of the charity is therefore still subject to further change.

© 2021 KPMG Australia Pty Limited, an Australian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.

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