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not for profit

ACNC compliance and what you must know

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Australia has over 56,000 registered charities that significantly contribute to social and economic development.

These organisations operate in various sectors, including health, education, environment and social services. Given the essential role played by these organisations, it is crucial to ensure that they are governed efficiently and effectively in the area of not-for-profit accounting.

In this article, we have outlined the ACNC compliance requirements and what you must know.


The Australian Government established the Australian Charities and Not-for-profits Commission (ACNC) in December 2012 as the national regulator for the not-for-profit sector. Its purpose is to maintain, protect and enhance public trust in the not-for-profit industry, support and sustain the sector and reduce unnecessary regulatory obligations.

Once a charity has passed the registration process that involves a detailed eligibility assessment, the ACNC registers the organisation on the ACNC portal (designed to help charities communicate directly with the ACNC) and helps them meet their obligatory requirements by offering advice and guidance.

It also helps the public understand the work within the not-for-profit sector. It works with state and national governments to build a reporting framework for not-for-profit initiatives and lists the necessary ACNC governance standards.

The ACNC Governance Standards 2019 prescribe the minimum requirements for the governance of registered charities in Australia.

In relation to not-for-profit accounting, the ACNC standards require charities to maintain accurate and complete financial records and to prepare financial statements that comply with accounting standards.

Reporting requirements for ACNC registered charities

For any key decision-maker in a not-for-profit business in Australia, it is important to understand the governance requirements for not-for-profit accounting.

Here is Accounting For Good’s ACNC governance checklist of important things you should know:

Annual Reporting Requirements and the Annual Information Statement

Registered charities must submit their financial statements as part of their annual reporting requirements.

The Annual Information Statement (AIS) provides information about the organisation’s activities and governance.

The AIS asks about the type of work and activities carried out during the year, who the charity supports (demographic info), the number of employees and some basic income, expenses and balance sheet information.

These reports are due annually and registered charities must submit them to the ACNC within six months after the end of the organisation’s fiscal year.

Organisations must lodge the information via the charity portal, which only authorised people of a registered charity can access.

It is also worth noting that the threshold for consideration as a ‘small’ charity is now $499,999. Although these ‘small’ charities don’t need to lodge financials, every charity must lodge an AIS.

Financial controls

Registered charities should establish appropriate internal controls to ensure the accuracy and completeness of their financial records.

These financial controls are procedures and policies that help to ensure that any financial transactions are properly authorised, recorded and reported.

We work with our clients to help establish these controls and periodically review and update them, as necessary.

Independent Audit

Medium-sized organisations can review or audit their financial statements, but large charities must independently audit their financial statements. The purpose of an independent audit is to provide an independent opinion on the accuracy and completeness of the financial statements.

The audit parameters will depend on the size and nature of the registered charity, plus any specific regulatory requirements that may apply to the organisation.

The ACNC has summarised the auditor selection process into five steps:

  • Start early to allow the reviewer or auditor time to perform their work.
  • Ask other charities for advice and recommendations.
  • Ensure the person is independent of the organisation.
  • Check they are appropriately qualified.
  • Make sure you are getting value for money.

Send a request-for-proposal (RFP) to auditing firms you believe have the appropriate traits you need will help you compare your options… but don’t send RFPs to every auditor in town. Shortlist around four to five companies you think are well-suited and review the proposals side by side.

Make it easy for your auditor to understand your needs by sharing information.

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Enforcements and Penalties

The ACNC may take enforcement action against an registered charity that fails to comply with the governance standards or any other regulatory requirements.

Enforcement action may include issuing directions or revoking the organisation’s registration. We work with our clients to ensure their organisation fully complies with all applicable governance standards and regulatory requirements to avoid potential enforcement action or penalties.

Compliance with the ACNC requirements ensures that a not-for-profit entity operates transparently and ethically, providing stakeholders with accurate and complete financial information.

This is why we suggest partnering with not-for-profit accounting experts. Contact us if you need to speak to us about your business.

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