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Twomeys has recently introduced a new Internal Audit service for businesses and other organisations.

Phil Swaffield has been appointed to oversee the Internal Audit division which provides an independent, objective assurance and consulting activity designed to add value and improve an organization's operations.

It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes.

Phil can be contacted at our Wagga office on 02 6927 0500.



Future in focus - GAPP

Future in focus

ACNC Repeal Bill – an uncertain outcome

In early December, the second reading debate in the House of Representatives adjourned with no vote taken on the ACNC Repeal Bill.  The debate will continue at some stage in the new year.  The first parliamentary sitting week is the last week of February.  The bill to abolish the commission was not accompanied by alternative arrangements for regulating charities.

The federal government's plan to abolish the ACNC faces an uphill battle, the Senate unlikely to support the repeal.

A Pro-Bono Australia survey has shown that four out of five charities support keeping the ACNC, and more than 40 charities have signed an open letter to the prime minister urging him to retain it.

More than 80 per cent of submissions to a Senate inquiry supported keeping it, and lobbying is expected to intensify next year.


Drafts of new financial-reporting standards imminent

The Australian Accounting Standards Board (AASB) has made decisions about how to determine when a contract with a customer includes a donation that should be accounted for separately.  It expects that an exposure draft will be issued in the first quarter of next year.

The AASB has also made decisions about service-performance reporting and expects an exposure draft to be issued in the fourth quarter of 2015.


New audit rules imminent

The Auditing and Assurance Standards Board will in the first quarter of 2015 approve a guidance statement on grant acquittals, multi-scope engagements, and revised standard ASAE 34XX 'Assurance Engagements on Controls', an operating date for engagements commencing on or after 1 January 2016.


APRA releases draft guide on super fraud risks

The Australian Prudential Regulation Authority (APRA) has released for consultation a draft guide on good fraud-risk management practices for Registrable Superannuation Entity (RSE) licensees.

'Prudential Practice Guide SPG 223 Fraud Risk Management' (SPG 223) outlines prudent practices on managing fraud risk, and focusing on current and emerging fraud-risk factors affecting the superannuation industry.

The draft is to be read with APRA's prudential standards and other guides relevant to fraud risk management – in particular, prudential standard SPS 220 'Risk Management' and prudential practice guide SPG 220 'Risk Management'.

It addresses the development and implementation of a fraud-risk management framework – including planning and resourcing, fraud prevention, fraud detection, fraud response, and monitoring and review – and superannuation-specific fraud risks (investment and outsourcing risks).  The guide includes two appendices addressing fraud risks and fraud controls.

Associations bill tabled in WA parliament

Revised legislation introducing financial-reporting obligations for incorporated associations has been tabled in the Western Australian parliament.  The 'Associations Incorporations Bill 2014' will replace the 'Associations Incorporation Act (1987)' and introduces a three-tiered structure for annual reporting and assurance obligations based on an association's size.  The legislation is similar to counterparts in other Australian states.

The new legislation will modernise administrative processes for associations, including setting out clearer explanations of committee members' duties and revised rules for dispute resolution and association trading.  The bill also includes a three-year transition period to allow associations time to amend their constitutions.  Model rules will be released for comment.

The new reporting obligations require:

  • Tier 1 entities with revenues of less than $250,000 to prepare financial statements on either a cash or accrual basis. The financial statements need be audited or reviewed only if required by a member vote or at the commissioner's direction
  • Tier 2 entities with revenues between $250,000 and $1,000,000 must prepare financial statements in accordance with accounting standards and have these reviewed or audited if required by member vote or the commissioner's direction;
  • Tier 3 entities with revenues of more than $1,000,000 must have their financial reports audited.

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ACNC Activities

Annual report showcases ACNC achievements

Progress in improving the data of Australia's first free, national publicly-available charity register and helping to free charities from unnecessary reporting burdens are among the significant achievements reported in the national charity regulator's annual report.  The ACNC regulates approximately 60,000 Australian charities that are eligible for Commonwealth tax concessions.

The commission's legislative objectives include maintaining and enhancing public trust and confidence in the sector, supporting and sustaining it and promoting the reduction of unnecessary regulatory obligations.

The recently released Australian Bureau of Statistics Satellite Account revealed that in 2012-13 the charity and not-for-profit sector contributed almost $58 billion (4 per cent of the GDP).  It is growing at a rate of 6 per cent a year and employs just over a million Australians.  The account also revealed that charities and not-for-profits held $176 billion of assets and received income of $107.5 billion.

Charities receive billions of dollars of tax concessions from both state and federal governments as well as direct financial support from millions of donors.

Among the ACNC's highlights and achievements were:

  • Improving the national register by including advanced-search techniques and identifying and removing hundreds of inactive charities;
  • Registering 3141 new charities;
  • Launching a charity 'passport' to reduce red tape (It provides government agencies with ACNC information.);
  • Launching the self-service charity portal, which reduces paperwork and allows charities to update their information online;Taking over maintenance and updating of the National
  • Standard Chart of Accounts, which provides a common approach to capturing accounting information.


Provision of housing by charities – an interpretation

The ACNC has published a Commissioner's Interpretation Statement (CIS) on the 'Provision of housing by charities'.  Its purpose is to provide guidance on the application of charity law to housing providers.

The statement addresses the following issues:

  • What charitable purposes may be fulfilled through the provision of housing?
  • To whom can charitable housing be provided?
  • What kinds of housing can be deemed charitable?
  • How does commercial activity fit with the provision of charitable housing?
  • What kind of interaction can occur between government and charitable-housing providers?

Other CISs concern:

The Hunger Project Case, which provides guidance to ACNC staff, charities and the public on the application of the law as set out in Commissioner of Taxation v Hunger Project Australia [2014] FCAFC 69;
Indigenous charities, which provides guidance to ACNC staff on how charity law applies to indigenous charities, including the recognition of indigenous disadvantage and applying a public-interest test.

The commission has also issued for public discussion a draft of a Commissioner's Interpretation Statement on health-promotion charities.  The draft aims to provide guidance on the meaning and scope of 'health-promotion charities' (HPCs). Comments are sought by 15 February 2015.

CISs provide guidance to ACNC staff, charities and the public on how the ACNC understands the law that applies to charities.  The statements are binding on ACNC staff.

While the ACNC does not have the power to produce binding rulings in the same way as the ATO's tax rulings, it will ensure that organisations that rely on the Interpretation Statements are treated fairly, consistent with objectives and regulations.  If the law or statement changes, the ACNC will apply the new position from the date of the change, not retrospectively in a way that could disadvantage a charity.  In most cases, the ACNC will also allow time for charities to respond to changes.

Completing your 2014 AIS

The ACNC will, for the first time, make financial information from Australia's registered charities available to the public free of charge.  An estimated 35,000 charities report on a standard financial year (1 July to 30 June); 8000 voluntary financial statements were lodged for 30 June 2012.

As part of the 2014 Annual Information Statement (AIS), all charities except for basic religious charities and those registered with the Office of the Registrar of Indigenous Corporations (ORIC) are required to provide financial information.

Financial statements, which are required for medium and large charities, and financial information that charities provide as part of their 2014 AIS, will be published on the ACNC register at

The ACNC has begun contacting charities to offer guidance and support. If charities using a standard financial year do not hear from the ACNC by early December, they are encouraged to log into their portals ( to check their contact details.

Charities are able to submit their 2014 AIS and financial reports online at  By reporting online, they will benefit from having their 2013 information already entered.  This should save significant time and effort.  Guidance on 2014 AIS is available at

Some tips for submitting your 2014 AIS



For all charities

1. Update/upload your responsible persons' details and governing documents.

2. Refer to the 2014 AIS guide, which includes definitions of all the financial terms mentioned in the AIS. The guide is available at

3. Refer to your charity's financial records when filling in the financial questions.

For medium and large charities

1. The financial information in your 2014 AIS should match the financial report that you lodge.

2. Check transitional arrangements to see if you are able to upload financial reports you have already submitted to a state or territory regulator.

3. If you are a medium charity ensure that you attach a review or audit report of your financial report.

4. If you are a large charity ensure that you attach an audit report with your financial report.

The ACNC has published the following templates, which help charities complete their 2014 requirements:

  • Transitional financial report template – large charity:  The template includes financial information questions in the 2014 AIS and notes to take to an auditor either to review or audit;
  • Transitional financial report template – medium charity:  The template includes financial information questions in the 2014 AIS and notes to take to an auditor either to review or audit;
  • Responsible entities declaration: A declaration to be signed by the responsible people of the charity under section 60.15 of the ACNC regulation 2013;
  • Audit and review reports templates: These templates are designed for auditors.


Public documents approved wording

Charities may use the following wording on public documents (such as letterhead, emails and websites) to demonstrate their registration with the ACNC: "[insert charity name] is registered as a charity with the Australian Charities and Not-for-profits Commission ABN [insert 11 digit ABN]". Note that a registered charity cannot use the ACNC logo.


Factsheet published to help charities operating overseas

The ACNC has published a factsheet advising overseas-aid and development charities on matters such as how to register with the ACNC, their ongoing obligations, the risks of operating overseas and links to external resources.

Overseas-aid and development organisations – those with overseas beneficiaries or activities, or that send money overseas – are able to apply to become a registered charity.  There are, however, conditions that must be met in applying for registration.  Organisations must:

  • Fit the legal meaning of charity;
  • Have an Australian Business Number (ABN);
  • Meet the ACNC's minimum governance standards;
  • Must not engage in or support terrorist or other criminal activities.


Don't donate to non-registered charities

The ACNC is reminding donors to check its register before donating.

Concerns have been raised about both the nature of Melbourne-based Voithame Tin Ellada (VTE) and the intended use of funds donated to it.  The commission has confirmed that VTE is not listed on its register and reminded donors that it was always a good idea to check the register before donating.

Some media have raised concerns about the 'Mothers and Children Fundraiser for Syria'.  The ACNC has confirmed that the organisation is not a registered charity.

The register is available at

Donors can also take other steps to ensure that they are giving to legitimate charities.  They should ask for identification from door-to-door and street-based charity collectors, be wary of online requests for donations (be mindful of suspicious emails and links), and ask for tax receipts, which should show a charity's details, including an ABN.  Donors should provide credit-card details only to trusted sources and research online and in annual reports how charities use their donations.

If you think that a charity collector is suspicious, or you receive an email you're not sure about, contact the charity to let it know.

For more information on safe giving, visit or call 13 ACNC (13 22 62). The Australian Competition and Consumer Commission also has useful information about safe giving. Visit


Hundreds complain about charities

The ACNC has received 639 complaints about charities in 12 months to 30 June 2014.

The regulator's 'advice services' resolved almost 400.  Others were assessed by compliance services, 42 needing a formal review or investigation.

In 2013-14, the commission revoked a charity's status after an investigation had determined that its purpose was not solely charitable.  It issued a warning and a direction to another charity during the year.

Most concerns about charities fell into three categories: governance (48 per cent) fraudulent or criminal activity (24 per cent), and private benefit (28 per cent).  Ninety per cent of complaints came from the public, government agencies contributed 8 per cent, and 'other' 2 per cent.

Four breaches of the ACNC Act stood out in 2013–14:

  • Inappropriate use of charitable funds:  The most common problem was charities using funds inappropriately – in ways that did not comply with their NFP purposes.  For example, charitable funds that were used to purchase private assets for 'responsible' persons;
  • Lack of accountability to members:  In several cases there was a lack of accountability to members.  Charities failed to convene meetings as required in their constitutions or they failed to follow the appropriate processes to amend constitutions;
  • Responsible persons failing in their duties:  Several 'responsible' persons failed to declare conflicts of interest, did not maintain accurate records or allowed a charity to operate while insolvent;
  • Involvement with criminal activity: Employee theft had occurred due to a charity's governance failures.


Raising a concern about a registered charity

The ACNC assumes honesty in regulating charities.  Most people involved with charities are, indeed, honest, act in good faith and try to do the right thing.  When concerns are raised about charities, the ACNC takes them seriously.

Since the ACNC was established, it has received more than 900 concerns and complaints, resulting in more than 400 formal investigations.  Investigations have led to the protection of $68 million in charitable funds.

The commission has simplified the process by which the public and the charity sector can raise concerns.  They may visit, complete 'Form 6A: Raise a concern with a charity' and email the completed form to

The commission details the kind of complaints and concerns it can act on.

Once the ACNC receives a completed form, it will send a confirmation email outlining what will happen next and privacy restrictions under the ACNC Act.  To find out more or to raise a concern, visit

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'NFP Governance and Performance Study' released

More than 30 per cent of Australia's Not-For-Profit organisations (NFPs) have discussed mergers in the past year as the NFP sector seeks to improve its efficiency and expand its services.  This is one of the key findings of the latest 'NFP Governance and Performance Study' released by the Australian Institute of Company Directors.

More than 2700 NFP directors with a combined income of $15 billion in 2013/14 participated in the study, making it the largest survey of NFP governance in Australia.  The respondents included directors from a wide range of organisations, including educational institutions, aged-care facilities, charities, recreational organisations and social-service providers.

The push for consolidation is greatest among NFPs with incomes above $10 million or those operating in social services.  Around a quarter of boards that have discussed a merger believe the process would be complete within two years, setting the scene for a new round of consolidation in the sector.

The results of the study show that NFP boards have extremely high standards of governance that allow directors to pursue the strategies that will achieve the best outcomes for their organisations and stakeholders.  Around 80 per cent of non-executive directors who took part in the study believe the quality of governance in the sector is better than it was three years ago.

Other key findings of the survey include:

  • Many NFPs are struggling to determine the impact of reforms, or proposed reforms, to government policy and legislation.  Seventy eight per cent of respondents called on the government to clarify its direction and create stability in operating environments as a matter of priority in the next three years;
  • Only 50 per cent of non-executive directors believe their organisations measure overall performance effectively.  Many would like more non-financial information to determine if an organisation is achieving its mission or purpose;
  • Sixty two per cent of respondents identify maintaining or building income as a high priority in the next 12 months as they seek to diversify their organisations' income streams and reduce their reliance on government funding;
  • Uncertainty about government funding is ranked as the second most important challenge for school boards in the next three years, behind only the need to maintain or enhance a school's reputation;
  • Directors of aged-care facilities nominate financial sustainability as their biggest challenge over the next three years, followed by compliance with government requirements.


Australian charities operating in more than 100 countries

The Curtin Australian Charities 2013 Report has revealed that 17 per cent of registered charities are involved overseas – they either operate in more than 100 countries or help people outside Australia. 

In 2013, Australian charities were most involved in India, the Philippines, New Zealand, Papua New Guinea and Indonesia.  Charities were also operating in areas of conflict such as Syria and Iraq.

The Australian Charities and Not-for-profits Commission (ACNC) said that it and other charity regulators needed to reduce the risk of misuse of funds sent overseas, including through charities.  The ACNC works with the Australian Federal Police and other intelligence and enforcement agencies to share intelligence and referrals on these issues.

The Australian Transaction Reports and Analysis Centre (AUSTRAC) has stated that charities working overseas are especially vulnerable to exploitation by terrorist supporters.  AUSTRAC says that money raised legitimately to help people suffering in conflict zones can get mixed up with funds raised specifically to finance terrorism.

The ACNC's advice is to send money only to trusted family and friends or to reputable humanitarian organisations.  Always research humanitarian organisations and other potential recipients before sending money, it advises.  If the humanitarian organisation is a charity, the ACNC recommends that you check its register and find out where the funds will go and how they will be used.

The ACNC's work in building a register improves the visibility of charities operating overseas.  Prospective donors and volunteers can search it to find charities that operate in particular countries.  They can also uncover detailed information about a charity and ensure that it is meeting its obligations.  The ACNC has published information on its website to support overseas giving and explain how charities can lower the risk of financing terrorism.

In addition to the register, charities can ensure that their overseas donations are not being misused through the commission's surveillance of charities' compliance with good-governance standards.  The standards play a role in improving the governance of all registered charities.

The commission has joined with the Australian Council for International Development (ACFID), the peak body for Australian not-for-profit and development organisations, to make compliance with ACNC governance standards easier for organisations.  (Ninety-seven per cent of ACFID members are also registered with the ACNC).  The ACNC website outlines principles and obligations charities must comply with in order to meet both the ACNC and ACFID requirements.


Is your charity complying?

A guide to the ACNC regulatory approach and self-assessment compliance test are the latest tools available from the regulator.  Its aim is to help charities stay on track.

'Your charity and ACNC Compliance' helps to demystify the role of the ACNC's compliance team, which investigates concerns it receives about charities.  'Take the ACNC compliance test: is your charity complying?' enables charities to do a quick 'health' check to see how well they are meeting their obligations.

'Your charity and ACNC Compliance' explains the defined process concerning how and when investigations and reviews are conducted, when charities may be notified, and what information can be shared and disclosed.  It also provides advice on actions charities should take if they find that they are not meeting their obligations.

The compliance test is quick and easy to do, allowing charities to make periodic checks.  It has five simple questions, and 'no' and 'not sure' answers to any of them should alert an organisation to investigate further or take remedial action.

Use the questions to assess how well your charity is meeting its obligations, and whether it is taking the right steps to comply with the ACNC Act.

Step  Question Explanation 
 1 Is your charity working towards its charitable purpose? A purpose is the reason your charity was set up – its mission.

Charities and their responsible persons (such as boards, committee members and trustees) must work toward this charitable purpose, make information about this purpose available to the public, and be able to show how it is trying to achieve this purpose.

 2 Is your charity using its profits and assets only for its charitable purpose? A charity must use its profits and assets only to try to achieve its charitable purpose and cannot use them for any other purpose. 

Consider how you can demonstrate this clearly, for example, through keeping appropriate written records that log correctly your operations

 3 Is your charity meeting its reporting obligations?

Every charity must lodge an Annual Information Statement (AIS). For the 2014 AIS, most medium and large charities must also lodge annual financial reports. If your charity has made a material error in its AIS or financial report, you must correct it as soon as possible. 

Every charity must notify the ACNC of changes to its name, address for service, responsible persons and governing documents, as well as if it has significantly contravened the ACNC Act and may no longer be entitled to registration. 

You should also notify the ACNC if you believe your charity has made a false or misleading statement to the commission.

 4 Is your charity meeting its record-keeping obligations? Every charity must keep written records that correctly record and explain its operations, transactions and financial position and performance. In most cases, charities must retain these records for seven years.
 5 Is your charity meeting all five governance standards, showing it has met minimum requirements for governance Apart from 'basic religious charities', all charities must meet governance standards under the ACNC Act and ACNC regulations before applying to register and to maintain registration.

These standards set out a principles-based, minimum standard of governance and are designed to help promote public trust and confidence in charities.

Governing documents templates released

The ACNC has developed a 'constitution' template to help small charitable companies limited by guarantee.  It's supported by a detailed clause-by-clause guide, a quick checklist for completing it, and a table that sets out which sections of the Corporations Act 2001 (Cth) may be relevant to clauses in the template.

Specifically, the template is designed to help:

  • An NFP that wants to incorporate as a company limited by guarantee and register as a charity with the ACNC;
  • A company limited by guarantee that wishes to become a charity registered with the ACNC;
  • A company limited by guarantee that is a registered charity and wants to update its constitution.

The NFP sector has supported the template and its supporting materials, which are available at

Charities will also find the following templates helpful in revising their governance requirements:

  • Template-governing documents:  Information about template-governing documents available for charities, such as model rules from states and territory incorporating regulators;
  • Examples of charitable purposes:  Contains examples of charitable-purpose clauses that a charity can use as a guide.


AGM considerations and new resources

The ACNC has developed a dedicated resource page to help charities to understand their obligations in relation to AGMs.  An AGM is a meeting held once a year that a charity's members are invited to attend.  Its purpose is to give members a report on the charity's activities and finances for the previous year, to allow time for them to ask questions, and to elect a board and committee members.

AGMs are among the most important events in a charity's annual calendar.  They provide an opportunity for members to gather and participate in governance.  Holding an AGM is one of the key ways a charity can demonstrate accountability, celebrate achievements and focus on the year ahead.  The ACNC encourages charities to use their AGMs to review activities and finances from the previous year.

At AGMs, charities should also remind themselves of the ACNC governance standards and consider how they can demonstrate that they are meeting them.  For example, holding an AGM is one of the ways that a charity can demonstrate that it is accountable to its members, required under governance standard two.  The standards also require charities to take reasonable steps to ensure that their board and committee members (responsible persons) are suitable for their roles (governance standard four) and that these people understand and are carrying out their duties (governance standard five).

Although the ACNC does not usually require charities to hold an AGM, they should check rules and legislation applying to them to find out whether they are required to do so.  If charities make certain changes at their AGM (such as to their names, responsible persons or governing documents), they must notify the ACNC.

The ACNC will be developing further resources such as template minutes, agendas and notices for AGMs over the next months to support charities wanting to hold annual meetings.


2000 charities might lose their status

The ACNC is revoking the charity status of hundreds of organisations it believes are no longer operating.  They have failed to contact the ACNC since its inception on 3 December 2012 and failed to respond to letters and calls.  They have also failed to complete their 2013 Annual Information Statement (AIS).  The ACNC was also unable to uncover evidence that the charities were still operating.

There may be many reasons for these charities to have gone 'missing'.  In many cases, they decide to operate under a different name or ABN, or might have merged with another charity and failed to advise the ACNC.

The project to clean up the ACNC's register began earlier this year, when around 6000 charities were found to be 'missing'.

The commission has subsequently been able to account for around 4000 charities that have updated their contact details, confirmed that they were no longer operating, sought voluntary revocation, or were identified by the ACNC as not requiring registration.

So far, more than 1500 of the 2000 'missing charities' have been revoked after an extensive ACNC search that failed to find 'proof of life'.  The ACNC has published a list of a further 403 charities whose registration it intends to revoke on 19 January 2015 unless they make contact.  Of these, 19 are based in the ACT, 114 in NSW, seven in the Northern Territory, 66 in Queensland, 31 in South Australia, six in Tasmania, 82 in Victoria, and 79 in Western Australia.

The full list of charities marked for revocation and information on how charities can contact the ACNC is available at  Each quarter, the commission will publish an intention-to-revoke registration of listed charities not in contact with the ACNC.  A spreadsheet of them will be searchable.

The ACNC's official register lists the names of Australia's registered charities and includes details of their activities, areas of operation and size.  It allows potential donors to check charities' credentials.  The register has been viewed more than 500,000 times online and is increasingly seen as a valuable community resource.

Lodge your 2013 Annual Information Statement

An estimated 7000 charities face penalties and having a 'red mark' against their name for not filing their 2013 AIS, which was due by 31 October.  The ACNC will publish the names of 'overdue' charities and issue penalties to charities that are found to be deliberately avoiding their obligations.

If the ACNC finds evidence that charities are intentionally not submitting, it will apply penalties.  Maximum penalties for non-compliance are up to $4260 for big charities.  Charities that also fail to submit their 2014 AIS will have their status revoked, and lose their entitlements to Commonwealth tax concessions.


Deadline for 2014 AIS extended

The ACNC will for the first time make financial information from Australia's registered charities available to the public free of charge.  An estimated 35,000 charities report on a standard financial year (1 July to 30 June) and are required to submit their 2014 AIS by 31 January 2015, an extension of a month from the date has been recently announced.

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Charity Governance

ATO's draft ruling on special conditions

The Australian Taxation Office (ATO) has released draft ruling TR 2015/D5: 'Income tax: special conditions for various entities whose ordinary and statutory income is exempt'.

The ruling relates to a proposed application of special conditions inserted by the Tax Laws Amendment (2013 Measures No. 2) Act 2013.  The conditions require that an entity must comply with all the important demands of its governing rules (Governing Rules Condition).

The ruling also stresses that charities must use their income and assets solely for the purpose for which they have been set up (Income and Assets Condition).

  • Three questions must be considered to determine whether a not-for-profit entity satisfies these conditions:  What are the charity's 'governing rules'?
  • What are the 'substantive requirements' in the entity's governing rules?
  •  Has the charity complied with all of these in its governing rules?

The ruling applies to some, but not all, income-tax-exempt entities that are listed at Section 50 of the Income Tax Assessment Act 1997 (ITAA).  They include registered charities, scientific institutions, public educational institutions, funds established to enable scientific research, societies, associations and clubs established for the encouragement of science, societies, associations and clubs established for community-service purposes, employee associations and employer associations, trade unions, public hospitals, hospitals run by a society or association, societies, associations and clubs established for the encouragement of animal racing, art, a game or sport, literature and music, and societies, associations and clubs established for musical purposes.

These bodies must satisfy special conditions applicable to the relevant item for their ordinary and statutory income to be exempt from income tax.

Income-tax-exempt entities should

  • review their governing rules
  • identify their 'substantive requirements'
  • assess whether the requirements are being complied with 
  • assess whether income and assets are being applied solely for the purpose for which the entity is established.

If a breach or misapplication is identified, the income-tax-exempt entities should immediately take steps to fix it.  You might have to notify the Commissioner of Taxation.

When a final ruling is issued, it will apply both before and after its date of issue.

Curtin Charities 2013 Report – a comprehensive picture of the sector

The Curtin Charities 2013 Report gives the first comprehensive, evidence-based analysis of Australian charities, revealing previously unknown facts about the sector.

Written by the Curtin University Not-for-profit Initiative, it analysed data from more than 38,000 charities registered with the Australian Charities and Not-for-profits Commission (ACNC).

Variety in the sector's activities and beneficiaries is remarkable, and it is believed that most of the regulatory burden is felt by a minority of charities.

Australian charities employ nearly a million people.  Ten per cent of them employ more than 90 per cent of workforce.  Another two million volunteers work for no fees.  The sector has a total income of more than $100 billion, and the report revealed that the sector had grown by 2 per cent annually since 1990.

The analysis was drawn from 38,341 Annual Information Statements submitted by charities in their first year of reporting to the ACNC (up to 30 June 2014).  It provided the first single-source, evidence-based research into the charity sector.

Charities undertook a broad range of activities in 2012-13, ranging from religious, community-development and research activities to emergency relief, animal protection and international pursuits.  More than a quarter of charities nominated religious activities as their main purpose, and 6 per cent were involved in primary and secondary education.

Almost 70 per cent of charities worked in one or more areas other than their primary pursuit.

A 10th of the charities administered about 80 per cent of the total number of staff and volunteers employed in the sector.  A 10th also accounted for 90 per cent of the sector's full-time jobs and almost $90 billion of its income.

A staggering 75 per cent of smaller charities do not employ full-time staff.

The report is invaluable for anyone – members of the general public, charitable organisations, researchers and policy makers – wanting to understand more about the sector.

Red tape for charities is in funding agreements

Commonwealth funding-agreement obligations are imposing a greater burden on charities than legislative obligations, a study into the ACNC's regulatory duties has found.  The report Research into Commonwealth Regulatory and Reporting Burdens on the Charity Sector by Ernst & Young (EY), demonstrated that there was significant scope for improvement of the regulatory and reporting environment faced by charities and not-for-profit organisations.

The report was commissioned after the charitable sector asked the ACNC for research into the sector's reporting obligations.  The report provides an independent, empirical insight into the reporting and regulatory burden imposed by the Commonwealth on charities.

It concluded that of the key sources of regulatory and reporting obligations faced by charities, fulfilling Commonwealth funding agreements imposed a far greater burden than legislative requirements.  It recommended that Commonwealth funding agencies and departments ensure that their reporting and acquittal requirements align with the Commonwealth Grants Rules and Guidelines.  It urged them to use key tools to reduce red tape, such as the ACNC's Charity Passport and National Standard Chart of Accounts (NSCOA).

EY examined the experiences of 15 case-study charities drawn from sub-sectors in which there was anecdotal evidence of significant red tape and where research on the burdens imposed was lacking.  They were social welfare, 'other' education (excluding schools and universities), and health and aged care.  EY also surveyed nearly 400 charities in total and analysed publicly available data.

EY estimated that the Commonwealth reporting burden on the 15 case-study charities had an average cost of $108,000 for the 2012-13 year – between $27,000 and $38,000 constituted the expense of complying with red tape.  The average Commonwealth burden cost small charities (charities with revenue less than $250,000 a year) $18,000 a year, and the counterpart figure for big charities (charities with revenue over $1 million a year) was $235,000.  EY estimated that the average annual burden imposed by ACNC reporting obligations was $150, or 0.1 per cent of total annual burden. EY defined 'red tape' as regulatory and reporting obligations that are excessive, unnecessary or confusing.  The report estimated that 25 to 35 per cent of Commonwealth obligations constituted red tape, funding-agreement obligations being the key source.

The report said that 'red tape' included having to report too often and provide excessive information.  When entities reported on multiple programs they were required to provide duplicate information to different government levels.  Governments made different financial-reporting demands and required differing reporting processes, and there were inconsistencies in regulatory frameworks across states and territories.

The Commonwealth's burden on charities made it harder for them to achieve their aims.  It concluded that the ACNC should consider adopting an 'honest-broker' role to drive government reforms that would reduce charities' burdens.

The research will help the ACNC to understand the source and scale of administrative requirements imposed by governments on charities.  It will also help to clarify which of these requirements constitute red tape.  One of the objects of the ACNC Act is to contribute to the reduction of unnecessary regulation, and the ACNC now has an empirical base on which to proceed.

The ACNC minimises its own regulatory requirements and supports robust innovation.  It also works with other agencies to reduce unnecessary and duplicative administrative requirements under the principle of 'report once, use often'.

The EY findings affirm the results of the recent Curtin University analysis of nearly 40,000 Annual Information Statements lodged by charities with the ACNC.

Warning for charities operating overseas

Overseas-aid charities need to protect themselves from vulnerability to criminal activity, including money-laundering and financing terrorism, the ACNC has advised.  About 6,100 registered Australian charities on the ACNC register say that they have charitable purposes and activities overseas.

The ACNC Act has a specific provision, requiring the regulator to consider whether charities are engaging in or supporting, terrorist or other criminal activities.  Every registration application the ACNC receives is checked carefully against lists by government agencies.

If they fail to have appropriate safeguards and processes in place, all charities are vulnerable to fraud and theft regardless of where their charitable activities are carried out.  However, charities may be at greater risk when sending money overseas.  Funds can be diverted or misused for criminal activities, money laundering and financing terrorism.  The ACNC advised that the simplest way to avoid a misuse of funds is for charities to 'follow the money' to ensure that they are not duped or become complicit.  Charities should also be aware of their legal obligations when providing financial aid overseas, particularly in countries where there is conflict and civil unrest.

Charities' obligations monitored

The ACNC has provided an overview of the role taken by a compliance team in response to concerns about charities meeting their obligations under the ACNC Act.  More information can be found on the ACNC website under, areas of concern for charity regulation.           

Generally, the public alerts the ACNC to concerns about charities.  Charities' regular reporting and referrals from other agencies also sometimes reveal concerns about activities. The compliance team is responsible for ensuring that charities meet their obligations under the ACNC Act and its governance standards.

The team considers whether any intervention is necessary and in serious cases intervenes and conducts either a compliance review (to review a charity's general level of compliance with the Act and address any risks identified) or an investigation (for higher-risk and more complex cases).

Governance standards reminder

Since 1 July 2013, there are new governance standards that apply to charities registered with the ACNC.  These standards set out a minimum standard of governance, including requiring registered charities to be accountable to their members and to ensure that their governing bodies ('responsible entities') under the ACNC Act of what the ACNC calls 'responsible persons' comply with the duties outlined in the governance standards specifically tailored for the not-for-profit sector.


ACNC activities - Oct 2014

400 charity tax concessions are at risk

The ACNC plans to revoke the charity status of 400 organisations it believes are no longer operating.  These charities are being removed from the ACNC register as they have not been in contact with the commission since its establishment on 3 December 2012.  They have failed to respond to letters and calls, and have not completed their 2013 Annual Information Statement.  The ACNC was also unable to find evidence to suggest that these charities were still operating.

Those still operating are required to contact the commission by 14 October 2014 if they wish to maintain registered.

The revocations follow the removal or revocation of almost 4000 charities from the register since the commission was set up, including 246 in August.  Some have revoked their registration voluntarily.

Charities that have had their status revoked no longer get tax concessions.  If a charity is revoked but later found to be operating, the ACNC will work with it to restore its status.

A total of 3200 charities might be removed from the register over coming months.  Charities are advised to complete their 2013 Annual Information Statement to ensure that they maintain their status and do not incur penalties.

The full list of charities marked for revocation, and information on how charities can contact the ACNC, is available at


240 'lost' charities status revoked

The ACNC has revoked the charity status of more than 240 entities it has been unable to find.  They include religious organisations, pre-school and parents clubs, trusts and foundations, and health-related organisations.

The charities form the first group of an estimated 4000 to have their registrations removed from the commission's register.  Their revocation will also result in the loss of access to Commonwealth tax concessions.  The ATO will be notified of the revocations.

Charities that have had their charity status revoked but are still operating are encouraged to contact the ACNC immediately and provide the necessary information to help the ACNC restore their registration.


Not solely charitable – status revoked

The status of two 'charities', Care 4 Kids Foundation of Australia Ltd and Indigenous Foundation of Australia Ltd, has been revoked after the ACNC ruled that their operations were not solely charitable.

The decision follows a five-month ACNC investigation into the charities' activities and purposes.  The investigations were undertaken with the charities' cooperation.  Both charities were given an opportunity to show why their registrations should not be revoked, and their responses were taken into account before a final decision was made.  The charities are able to object to this decision and can re-apply to be registered once the ACNC's concerns are wholly addressed.

An entity is entitled to registration with the ACNC if it meets the requirements set out in section 25-5 of the Australian Charities and Not-for-profits Commission Act 2012.  Registration entitles charities to apply for a range of Commonwealth tax concessions such as 'deductible gift recipient status', and income-tax exemption.  Charities lose these benefits if their charity status is revoked.

Care 4 Kids Foundation of Australia Ltd operates in New South Wales, Victoria, Tasmania and South Australia.  Indigenous Foundation of Australia operates in New South Wales and Tasmania.  Both charities are managed by the same directors.  These directors are also involved with a for-profit organisation, Cancer Foundation of Australia Pty Ltd.  This organisation is not a registered charity and not within the ACNC's jurisdiction.

The charities' revoked status is recorded on the National Charity Register at

The ACNC has dealt with more than 800 complaints or concerns about charities since its inception in December 2012.  In most cases, the commission has worked with charities to allow them to resolve issues.  The majority of complaints were resolved with education and advice.  The commission has worked with boards to rectify concerns.

Charity status revoked – Canberra church

The ACNC has revoked the charity status of Canberra-based The New Connection Church Incorporated.  The decision to revoke the church's registration and status follows a warning and direction to provide information and address breaches of the Act.

On 28 April, the ACNC advised the church that it had breached the Act by failing to lodge its 2013 Annual Information Statement.  On 26 May, the commission reminded the church that it had failed to respond to advice about filing relevant information in its annual information statement.  Information about the warning and direction is recorded on the ACNC's website under 'compliance' decisions.


Help with regulatory and compliance guides

A guide to the ACNC's regulatory approach and self-assessment compliance test are the latest tools to help charities stay on track.

'Your charity and ACNC Compliance' helps to demystify the role of the commission's compliance team when investigating concerns it receives about charities.  The 'Take the ACNC compliance test: is your charity complying?' enables charities to check that they are meeting their obligations.

'Your charity and ACNC Compliance' explains how and when investigations and reviews are conducted, when charities may be notified, and what information can be shared or disclosed.  It also provides advice on actions charities should take if they find that they are not meeting their obligations.

The ACNC has received more than 1000 concerns about charities since December 2012, more than half being resolved by the commission's advice service.  Of 350 concerns referred to the compliance team, about three-quarters were from the public.  The Compliance Directorate finalised 51 cases last year, which saw 83 compliance issues substantiated and addressed.  Four charities had their registrations revoked as a result of non-compliance.  In 2014-2015 the ACNC expects these numbers to increase – serious concerns continue to be brought to the commission's attention.

The commission found that charitable funds were being inappropriately used and that board members and trustees were failing to declare conflicts of interest and maintain accurate records.  Criminal activity – such as employee theft – was also uncovered, and some charities simply failed to be accountable to their members, a requirement of their constitutions.

During 2013-14 year, the ACNC took a range of actions, including working with charities to improve record-keeping, managing conflicts of interest and engaging professional advisors.  It helped charities to develop agreements to guarantee the long-term protection of their assets; shared information with other agencies.  Sometimes, enforcement was appropriate.

The compliance test is quickly and easily completed.  It has five simple questions, and 'no' and 'not sure' answers are enough to alert an organisation to investigate further its activities or take remedial action.


Deductible Gift Recipients fact sheet

A fact sheet on Deductible Gift Recipients (DGRs) is available on the ACNC website.  Not all charities qualify for DGRs, however charities can apply for DGR endorsement and the ACNC will pass on the information to the ATO, which determines DGR eligibility.



Financial reporting insights - Oct 2014

Consolidation required for NFP entities

Australian Accounting Standard AASB 2013-8 'Amendments to Australian Accounting Standards – Australian Implementation Guidance for Not-for-Profit Entities – Control and Structured Entities' applies to 31 December 2014 balance date for the first time..  Schools, churches and charities are likely to be affected.

The amendments provide significant guidance to assist not-for-profit entities in private and public sectors to apply AASB 10 'Consolidated Financial Statements' and AASB 12 'Disclosure of Interests in Other Entities'.

The main change from the previous requirements is that the concept of control is now more specific.  A three-step approach is applied to determine if control exists focusing on power, returns and a link between power and returns.  That is, the investor must have:

power over the investee
exposure, or rights, to variable returns from its involvement with the investee, and
the ability to use its power over the investee to affect the amount of the investor's return.

All three of these criteria must be met for control to be established.  NFPs must reassess whether they still control or now control other entities under AASB 10.

Many schools have a building fund or foundation in which money is held for special projects.  In the past, these funds might not have been consolidated in financial reports, but as schools can direct their use, school councils need to be aware of new reporting obligations.

Religious entities will also be affected.  They often have relationships with entities that provide education programs within a church, say, or that are devoted to fundraising.  Religious entities might not have previously thought that these needed to be included in a consolidated report.  If they direct the activities of these entities, they will now need to be included.

The guidance does not amend or deviate from the principles underlying the standards.  The guidance illustrates the principles with a range of comprehensive examples.  It explains various principles in AASB 10 regarding the criteria for determining whether a not-for-profit entity controls another entity.  For example, it explains that the basic terms 'investor' and 'investee' in AASB 10 refer to entities that have a relationship in which control of one entity (the investee) by the other (the investor) might arise.  The guidance also addresses 'protective' and 'substantive' rights and the relevance of non-financial returns in applying the control criteria.  A range of comprehensive examples illustrates the principles.

The AASB decided to include detailed examples based on the circumstances of NFP entities to illustrate how the requirements might be applied.  Examples address local government, universities, and delegated powers in the public sector.  Examples reflecting some common circumstances for NFP entities in the private sector are also included.  The examples would apply by analogy to types of NFP entities other than those identified.

 From these the following guidance was ascribed:


NFP Context


Financial interest not necessary

Its about the relationship


Deploy assets or incur liabilities

Providing goods and services to investor/other parties

Might arise from legislation


Policy directions

Veto rights over budget

No need for day-to-day responsibility


Financial and non-financial

Direct and indirect

Furtherance of investors objectives

In respect of AASB 12 "Disclosure of Interests in Other Entities", the implementation guidance explains the application of the AASB 12 definition of 'structured entity' by NFP entities. This affects the disclosures that an NFP entity would have to make in its general-purpose financial statements to meet the requirements of AASB 12.

Many NFPs have not yet considered the changes much less performed a reassessment of their consolidation conclusions.  These entities might be caught out by the changes; there is a significant time commitment for gathering the necessary additional information to perform the retrospective restatement of newly consolidated subsidiaries and extensive disclosure requirements for subsidiaries, joint ventures and associates.

New superannuation standard – AASB 1056

The Australian Accounting Standards Board (AASB) has issued a new standard applying to superannuation entities.

AASB 1056 'Superannuation Entities' replaces AAS 25 'Financial Reporting by Superannuation Plans' with effect for annual reporting periods beginning on or after 1 July 2016.  Early application of AASB 1056 is also allowed.

AASB 1056 applies to large superannuation entities regulated by the Australian Prudential Regulation Authority and to public-sector superannuation entities.  It does not apply to self-managed superannuation funds or small APRA funds.

In relation to the matters it specifically addresses, AASB 1056 applies in place of the requirements of other Australian Accounting Standards.  On matters that AASB 1056 does not specifically address, other Australian Accounting Standards apply.

AAS 25 was issued in the early 1990s to address the financial reporting issues that superannuation entities were specifically dealing with.  AASB 1056 updates the requirements in light of recent significant developments in the superannuation industry and the adoption of IFRS in Australia.

AASB 1056 is a substantial improvement on AAS 25, particularly in respect of its liability measurement requirements and the consistency of requirements in relation to the financial statements to be presented by all types of superannuation entities, whether they have defined contribution members, defined benefit members, or both.


Financial report reminder

Registered charities are required to prepare their first financial reports for the ACNC for the 2013-14 financial year.  The first financial report will need to be lodged with the ACNC by 31 December 2014, or within six months after the end of an approved substituted accounting period that commences after 1 July 2013.

Large registered charities are required to have their financial reports audited, and medium registered charities can choose either to have their financial reports reviewed or audited.

Companies that are not registered with the ACNC or cease to be registered with the ACNC must continue to lodge their annual financial reports with ASIC if it's obligatory according to tests in the Corporations Act.


Charity reporting released

Chartered Accountants Australia and New Zealand released 'A guide for charities reporting under the ACNC Act 2012' to help them to determine whether the ACNC reporting requirements apply.  The guide provides details about obligations on not-for-profit entities in relation to record-keeping, reporting and auditing.  It also covers what financial reports need to be lodged.

The new guide is a supplement to the latest issue of 'Enhancing Not-for-profit Annual and Financial Reporting'.  This was released in April 2013 when not all the regulations relating to the ACNC Act were finalised.

Section 1 contains an explanation of record keeping, reporting and audit requirements of the ACNC Act.  Section 2 provides decision flowcharts that will help users to decide if the ACNC reporting requirements apply to them, what type of reporting is appropriate, and what the report should contain.

This material supplements the content of sections 4 and 5 of 'Enhancing Not-For-Profit Annual and Financial Reporting that deal with reporting matters'.  Sections 1, 2 and 3 remain unchanged and continue to be relevant.

The guide is applicable for the first annual reporting season commencing on or after 1 July 2013.  It also reminds users of potential changes to charity regulation in light of the Federal government's intention to replace the ACNC with a Centre of Excellence.  This will not affect the 2014 financial year but may affect subsequent reporting periods.


National Standard Chart of Accounts updated

The National Standard Chart of Accounts (NSCOA) has been updated and is available on the ACNC website.

NSCOA is a data-entry tool and data 'dictionary' for not-for-profits, including charities.  All Australian governments (Commonwealth, State and Territory) have agreed to accept NSCOA when requesting information from not-for-profit entities.

While NSCOA is not compulsory, there are benefits in using it, and it is part of the ACNC's efforts to reduce red tape.  It provides a common approach to the recording and reporting of accounting information, reduces the time and cost of preparing financial statements, and provides a consistent approach to preparing financial information for reporting to multiple jurisdictions.



ACNC’S future in focus

Replacing the ACNC – an options paper is released

The Federal Department of Social Services (DSS) has released an options paper entitled  'Australia's Charity and Not for profits' that describes plans to replace the ACNC with a National Centre of Excellence and ways of transferring its regulatory functions back to the Australian Securities and Investments Commission (ASIC) and the ATO.

The paper explains:

  • the current legislative arrangements
  • the government's plans to establish new self-reporting arrangements.  Charities will be required to maintain a publicly accessible website that features the names of responsible persons; details of all funding received from government (Commonwealth, State and Local) and financial reports.  Charities will have until 1 July 2015 to update their websites
  • reinstatement of the previous ASIC reporting obligations for charities that are companies
  • the transfer of charitable-status determination back to the ATO, identifying two options relating to how the ATO might complete this work.  One option proposes an independent panel comprising external experts to provide advice on objections raised by charities that disagree with the initial ATO assessment on the determination of their charitable status.  The second option proposes a separate unit within the ATO responsible for determining outcomes for applicants who objected to findings on eligibility and related tax concessions
  • charities currently exempt from providing financial reports would retain the exemption.  Such charities include small organisations and religious charities
  • the revised compliance arrangements that will involve using the current powers of the states, ATO and APRA, and
  •  transitional arrangements that give charities until 1 July 2015 to comply with the new arrangements.

The paper says that the Australian Charities and Not-for-profits Commission (Repeal) (No.2) Bill is scheduled to be introduced into parliament later this year, but that the new arrangements for the ATO and ASIC will take effect immediately.

The current national register will be archived, and there is no intention to continue maintaining anything similar.  As result, there will be no need for an Annual Information Statement.

Comments on the paper closed on 20 August 2014.  The department intends to provide a summary of written submissions on its website.

The Federal government is also consulting on the proposed NFP National Centre of Excellence (NCE) as part of the ACNC.  The consultation on the NCE explicitly excludes any issues related to the abolition of the ACNC and stresses that the NCE is not a regulator.

© Pty Ltd  Kindly reproduced with the permission of Pty Ltd

Charity Governance

Your risk of being deregistered


Charities that the ACNC believes are no longer operating will have their registration revoked if they unable to be contacted.  If the ACNC does not hear from these charities by 30 September 2014, it will commence a process to revoke their registration as charities with the ACNC.  After being revoked, the charities will no longer have access to their charity tax concessions.


Prior to 3 December 2012, the ATO endorsed charities for charity tax concessions.  These charities were automatically registered with the ACNC based on information provided from the ATO.  A number of registered charities have not responded to communication from the ACNC (i.e. no known address/contact details or correspondence has been returned to sender).  The ACNC needs to determine whether these charities are still operating.


Each quarter the ACNC will publish a Notice of intention to revoke registration of listed charities not in contact with the ACNC with a spreadsheet list of charities which is searchable.  What you should you do if your charity is on this list?

1. If your charity is still operating:  Download form "3B: Change of charity" from the ACNC website, complete, send, and a request a password.  Then you can log into the charity portal and complete your 2013 Annual Information Statement and update other details.  Also read the "Manage my charity section" on the website to understand the ongoing obligations
2. If your charity ceased operating before 3 December 2012:  Write to ACNC confirming when your charity ceased operating and provide evidence of this if possible, e.g., a notice of deregistration from another regulator, and 3. If your charity ceased operating after 3 December 2012:  Download form 5A: "Application to deregister charity" and send to the ACNC.


Top charity concerns revealed


Concerns about charity governance, fraud and private benefit are the leading causes for complaints about charities according to the "ACNC compliance – an overview of the compliance activity" report undertaken by the ACNC.  The report includes identified case studies and lessons for other charities facing compliance issues.


The ACNC compliance team received and assessed 202 charity related concerns.  The majority of concerns raised about charities fit three main risk types; governance (50), fraudulent or criminal activity (48), and private benefit (21).


The majority of the concerns (131) were raised by the public, 40 were referred by other government agencies and the remainder (31) came from other sources and active intelligence.  Referrals to the ACNC from other government agencies have come from 11 different agencies, including seven state government bodies and four Commonwealth agencies.  There are currently 55 cases open, eight of these involve investigations of serious matters.


The top charity concerns were:

· Governance (25%):  a conflict of interest between a charity's board members and the operational decisions made regarding the charity; the charity not following its constitution; financial mismanagement; and lack of, or inadequate policies and procedures
· Fraudulent or criminal activity (24%):  sham charity soliciting funds; bank accounts changed, funds missing, sale of charity assets; fundraising scams
· Private benefit (10%):  charity resources used for personal use; inappropriate personal expenses; corporate sponsorship used for personal, rather than charitable purpose, and
· Other (41%)soliciting funds when not carrying out any charitable activities; insolvency; and harm to those who benefit from the charity.


The ACNC responds to concerns raised about charities and undertake intelligence gathering and investigations, when appropriate.  When wrongdoing occurs, it is often not just a financial loss that damages the charity; there is the impact on reputation and the effects on staff, volunteers, beneficiaries and board members.


Good governance a priority for new charities


Good governance is an area of concern for newer charities, a recent review by the ACNC found.  In examining its 15 most significant current compliance cases, the ACNC found that every case involved governance issues.  One-third of these cases involved charities less than five years old, all were charities of varying size, and they were from every state and territory except the Northern Territory.


Governance issues usually arose through a charity board's inexperience or understanding of good governance.  At times, it had been clear a board has 'fallen asleep at the wheel' or engaged in wilful and deliberate wrong doing.  The ACNC acts firmly and quickly where there is a likelihood of serious mismanagement and misappropriation.


Since commencing as the national charity regulator 15 months ago, the ACNC has received 500 complaints, of which more than 240 have warranted an investigation or review by the ACNC's 12-person compliance team.  The Commission's most common source of reliable information was from the public, followed by former charity employees or board members, and referrals from other agencies.


The ACNC has already encountered a wide range of governance issues.  The most common problem is when charities use funds inappropriately, in ways which do not comply with the charity's not-for-profit purposes such as using charitable funds to purchase private assets for board members.


The ACNC has also seen a number of cases where there is a lack of accountability to members.  In some cases, charities have failed to convene meetings as required in their constitution or have failed to follow the appropriate process to amend constitutions.


The third most common theme is where responsible persons fail in their duties.  This includes failing to declare conflicts of interest, not maintaining accurate records or operating while insolvent.  At the extreme end, the ACNC have investigated charities where allegations have been made of criminal activity.


The ACNC has produced "Governance for good", a guide for charity board members, and "Protect your charity from fraud" to support the sector.  These are very handy references for board members.


Financial Reporting Insights

What is required for the 2014 financial reports?


Unless falling into the exemption, medium and large charities must also submit an annual financial report which includes:
1. a charity's financial statements
2. the notes to the financial statements, and
3. a declaration made by a charity's responsible persons (such as committee or board members, or trustees).


The ACNC will accept financial statements that are either general purpose or special purpose, under the Australian Charities and Not-for-profits Commissions Regulation 2013 (ACNC Regulation).


Medium charities must have their reports reviewed or audited and submit a reviewer's report or an auditor's report.  Large charities must have their reports audited and submit an auditor's report.  Small charities can choose to submit financial reports, but this is not required.


The exemption:
1. If the charity: is an incorporated association, cooperative or charitable fundraising organisation, and currently submits financial reports to a state or territory regulator, and is a medium or large charity, the Charity can submit the same financial report to the ACNC.  The ACNC will accept this financial report as meeting its  requirements for the 2014 reporting period, and
2. The charity must still complete the 2014 AIS, and submit the ACNC the same financial report previously provided to the State or territory regulator.


Special purpose financial statements


If a registered entity is not required to apply the Accounting Standards, and is not exempted from producing financial statements, it is still required to apply the parts of these accounting standards that do expressly apply only to a reporting entity:

· AASB 101 "Presentation of Financial Statements"

· AASB 107 "Statement of Cash Flows"

· AASB 108 "Accounting Policies, Changes in Accounting Estimates and Errors"

· AASB 1031 "Materiality"

· AASB 1048 "Interpretation of Standards", and

· AASB 1054 "Australian Additional Disclosures.