ACNC needs to reassess its 'light touch' approach, audit finds

The charities watchdog was found to be mostly effective in its role, but issues were highlighted around compliance and building public trust

The charities commission’s “light touch” approach to registration has been criticised by the Australian National Audit Office, which says the regulator needs to better document its assessment processes.

The ANAO’s audit of the Australian Charities and Not-for-profits Commission found that the watchdog has been largely effective in delivering its regulatory responsibilities and reducing red tape for charities.

But it said the ACNC has taken a “light touch” approach to assessing whether charities meet required governance standards, putting the onus on organisations to self-assess compliance and seek further information on the ACNC’s website.

The audit report said other than relying on an organisation’s signed declaration that it complied with all governance standards, it was not clear how the ACNC assessed compliance in this area.

“There was limited evidence of wider checks being undertaken, including – as required in the ACNC’s internal work instruction – of internet searches being undertaken on the charities purposes and activities,” the report said.

 The ANAO called on the commission to better document assessment processes, and verify whether its “light touch” approach to registration was appropriate.

The report recommended the ACNC improve the integrity of information on the Charity Register, and enhance its compliance framework to better build public trust and confidence in the sector.

It said public trust and confidence could also be improved by amending its current set of performance indicators to focus more on directly measuring the impact of its regulatory activities.

ACNC commissioner Dr Gary Johns said the commission was taking all ANAO recommendations on board.

“We agree with all the recommendations contained in the report, which align with our commitment to continuous improvement in delivering effective and efficient national regulation of charities,” Johns said.

“The recommendations will assist us to ensure our settings are appropriate regarding risk, entitlement to ongoing charity registration, data management, and unnecessary regulatory burden.

“The ANAO report confirms we are on the right track and provides an objective view of areas for further development and improvement.”

Krystian Seibert, an industry fellow for the Centre for Social Impact, told Pro Bono News it was pleasing that the ACNC was found to be largely effective in delivering its regulatory responsibilities.

He said the ANAO’s findings and recommendations were sensible and constructive, and would improve how the ACNC approaches its functions. 

“Together with the recently released government response to the ACNC review, there is now a quite large body of work to undertake in terms of evolving the ACNC regulatory framework,” Seibert said.

“It will be important that this work is prioritised appropriately, whilst acknowledging that it’s likely that for the remainder of 2020, the focus of government and stakeholders will be on responding to the COVID-19 crisis.”  

The full report can be seen here.