Government moves to increase financial reporting thresholds for charities
24 February 2021 at 6:05 pm
Advocates of the reform say it will help charities “get back on their feet and future-proof their economic sustainability”
Charities are being encouraged to share their thoughts on a proposal to streamline financial reporting requirements for the sector.
The Council on Federal Financial Relations (CFFR) is developing a framework for increasing the harmonised financial reporting thresholds for charities registered with the Australian Charities and Not-for-profits Commission (ACNC).
This move was announced by the federal government last December, as part of a plan to simplify financial reporting requirements for thousands of small and medium charities.
The proposal would see the reporting thresholds increase:
- from less than $250,000 to less than $500,000 for small charities;
- from $250,000 or more, and less than $1 million, to $500,000 or more and less than $3 million for medium charities; and
- from $1 million or more to $3 million or more for large charities.
This is expected to decrease professional service expenses for almost 6,800 charities that move to a lower threshold and therefore have lesser reporting requirements.
A consultation paper has just been released to get the view of stakeholders on this proposal.
CPA Australia has been advocating for streamlining the sector’s financial reporting requirements and has welcomed the proposed changes.
Dr Jane Rennie, CPA Australia’s general manager of external affairs, told Pro Bono News this was a timely reform given the sector was hit hard by COVID-19.
“The proposed changes will help charities get back on their feet and future-proof their economic sustainability,” Rennie said.
“We’re pleased that common-sense has prevailed and we are close to achieving a unified national approach to charities regulation in Australia. The next step is to reduce the financial reporting burden on the rest of the not-for-profit sector.”
Rennie did note that the proposed thresholds were lower than what was recommended by the ACNC Review – less than $1 million for small charities, from $1 million to less than $5 million for medium charities and over $5 million for large charities.
“However, this could still be a good outcome if it makes it more likely that we can eventually achieve streamlined regulation for all not for profits,” she said.
The consultation paper noted that while the Commonwealth can increase the ACNC reporting thresholds with relative ease, most state and territory jurisdictions will need to change legislation or regulations to ensure there is harmonisation with these changes.
But with the states and territories recently agreeing to implement a cross-border recognition model for fundraising, it is hoped they will consider aligning the progression of these two reforms where possible.
You can find out more information and respond to the consultation paper here.