In January 2019 the ACNC published a report which covers the statistics for the 2017 reporting period.
- 47,950 Annual Information Statements were lodged with the ACNC.
- Of the financial report submitted by medium and large charities:
- 46% lodged General Purpose Financial Reports
- 40% lodged Special Purpose Financial Reports
- 6% lodged General Purpose – Reduced Disclosure Requirements
- 8% not disclose the type of report
I found it surprising that not more NFPs took advantage of the savings that might be achieved by preparing General Purpose RDR financial reports.
- 747 charities had made errors in calculating the full-time equivalent staff numbers. Many charities incorrectly included volunteers in these calculations.
- In reviewing financial reports, the ACNC concentrated on medium and large charities, and reviewed 152 financial reports. One of the checks was to make sure that the summary income statements and balance sheets lodged in the AIS show the same information as in the financial reports. This was OK for over 80%, however for around 14% different information was used.
- Of the 152 financial reports reviewed, 27 were consolidated financial reports. Some of these incorrectly included information on non-registered charities, or entities other than the parent entity.
- Annual financial reports lodged with the ACNC are required to comply with Australian Accounting Standard AASB 101: Presentation of Financial Statements. This requires a complete set of financial statements, for example:
- a statement of profit or loss and other comprehensive income
- a statement of financial position
- a statement of changes in equity
- a statement of cash flows, and
- notes to the financial statements.
The ACNC noted that almost 77% of financial reports reviewed included a complete set of financial statements, which indicates that 23% did not.
- The main items not dealt with well in financial reports examined were:
- disclosure of accounting estimates and judgements (23% did not)
- disclosure of whether it is a not-for-profit entity (41% did not)
- disclosure of compliance with Australian Accounting Standards when they were comply with (23% did not)
- For General Purpose Financial Reports, disclosure of Key Management Personnel compensation (10% did not).
- Almost 40% of the auditor’s reports accompanying financial reports that were examined
- Almost 45% auditor/reviewer reports did not make reference to compliance with the ACNC Act.
To help charities with the 2018 financial reports and AIS’s, the ACNC has developed a checklist which can be found at: www.acnc.gov.au/financialstatements
Some of these results are very good, and others quite disappointing. Directors, management and auditors of NFPs should be up to date with all of their financial reporting requirements, and make sure that they are lodging the required information with the ACNC.
Should you have any questions in relation to any of the above matters, of any matter related to your financial reporting, please do not hesitate to contact us.