ACNC reporting mistakes charities and NFP boards must avoid

Annual reporting is far more than an administrative exercise. In the charity and NFP sector, ACNC reporting is an essential part of quality governance and compliance; however, it also demonstrates transparency and supports public trust, two critical components in establishing financial resilience and building a positive profile.

Each year, the ACNC identifies common reporting issues. Errors can lead to delays, additional scrutiny, or even regulatory action. While most organisations aim to meet their obligations, simple mistakes can create compliance risks. Understanding the most common reporting errors helps boards and executives avoid unnecessary problems and implement a strengthened governance process to meet reporting obligations. In this article, Paula outlines common reporting errors, how to prepare for an ACNC review, and how to build a year-round compliance process.

Most reporting issues arise from incomplete information, inconsistent records, or misunderstandings of reporting requirements. Some of the most common errors include:

• Incorrect charity size classifications
• Missing or incomplete financial information
• Late Annual Information Statement (AIS) submissions
• Failure to disclose the responsible persons accurately
• Outdated governing documents or contact details
• Inconsistent information across different reporting documents

These issues are rarely deliberate. Instead, they typically stem from fragmented record-keeping, staff changes, or reporting processes that only receive attention once a year. The challenge for many organisations is that compliance responsibilities are shared across finance teams, management, and boards. Without clear ownership and review processes, errors can easily go unnoticed until reporting deadlines arrive.

Regulators often see inconsistencies between the information reported in the Annual Information Statement and the accompanying financial statements. Examples of this include:

• Revenue figures that differ between documents
• Inconsistent expense classifications
• Different reporting periods being referenced
• Contradictory information about activities or operations

These discrepancies can raise questions about the accuracy of an organisation’s financial controls and governance practices. Before lodging reports, organisations should perform a thorough reconciliation between the AIS and financial statements. Key financial figures should align, supporting schedules should be reviewed, and any unusual variances should be clearly explained. A final review by both management and the board can reduce the risk of reporting inconsistencies.

Governance Standard 5, which outlines the legal and fiduciary duties of a charity’s “Responsible People”, is one of the most important compliance obligations for charities and NFP boards. The standard requires charities to ensure that responsible persons, including directors, board members, and trustees, are suitable to hold their positions and understand their legal duties. Common areas that boards overlook include:

• Maintaining documented conflict of interest processes
• Ensuring directors understand their governance responsibilities
• Conducting regular reviews of board composition and suitability
• Keeping governance policies current and accessible
• Recording key governance decisions appropriately

Many organisations focus heavily on financial reporting; however, attention to governance documentation is equally important. Governance failures can attract the same level of regulatory concern as financial reporting errors. Board members should regularly review their governance framework and confirm that policies, registers, and meeting records remain up to date.

Most charities will never experience a formal investigation; however, the ACNC may conduct reviews when concerns arise or inconsistencies are identified. One investigates alleged wrongdoing, while the other seeks to mitigate emerging risks. Preparation starts long before any regulator makes contact. Organisations should ensure they can readily access:

• Current governing documents
• Board and committee meeting minutes
• Financial statements and supporting records
• Conflict of interest registers
• Policies relating to governance and compliance
• Evidence supporting key AIS disclosures

A properly instigated and maintained document management system will make responding to information requests easier. It also demonstrates a commitment to transparency. As charities grow or evolve, compliance requirements may change. Boards should periodically assess whether reporting practices reflect the organisation’s current activities and structure.

At Accounting For Good, we advocate for charities and NFP organisations to treat ACNC reporting as an ongoing responsibility. Implementing a year-round compliance process helps reduce reporting pressure and improve reporting accuracy. Effective organisations typically maintain compliance calendars with key reporting deadlines. They review governance obligations throughout the year and conduct periodic financial reconciliations. While it may seem like additional work, updating responsible person records in real time, providing governance training for directors and board members and scheduling compliance reviews before reporting periods commence will not only ensure compliance but save valuable time and resources over the long term.

Embedding compliance into regular operational processes allows issues to be identified and resolved early, rather than during a last-minute reporting rush.

While reporting requirements can be complex, the most common errors are preventable. For charity leaders, CFOs, and board members, the goal should be creating robust governance and financial reporting processes that support transparency and compliance throughout the year. By learning from common regulator findings and strengthening internal controls, charities can reduce risk and focus more time and resources on delivering their mission.