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New agreement gives charities eased financial reporting

Adrian Flores
Adrian Flores
16 December 2020 1 minute readShare
New agreement gives charities eased financial reporting

An agreement between the Commonwealth and the states and territories will aim to ease financial reporting requirements for charities in response to the impacts of the COVID-19 pandemic on the sector.

The agreement signed by all federal, state and territory treasurers aims to address inconsistent and outdated regulations across jurisdictions that create an estimated regulatory burden of $13.3 million a year for the charitable fundraising sector, according to Treasurer Josh Frydenberg.

In addition, the Council on Federal Financial Relations (CFFR) also agreed to establish a cross-border recognition model to harmonise charitable fundraising laws.

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Under the model, there will be a single registration point for national operators aimed at reducing the costs and administrative burdens for charitable fundraisers that operate across multiple jurisdictions.

“The recent Royal Commission into National Natural Disaster Arrangements highlighted the crucial role charities play in disaster recovery efforts, but noted the complexities of operating across jurisdictions with distinct regulatory schemes,” Mr Frydenberg said.

 

Charity financial reporting

The CFFR has agreed to develop a framework by mid-2021 to lift the financial reporting thresholds to benefit over 5,000 small and medium charities.

Under the framework, over 3,000 charities will no longer need to produce reviewed financial statements. In addition, approximately 2,000 charities will no longer be required to produce audited financial statements.

The changes were recommended by an independent review of the ACNC Legislation, Strengthening for Purpose: Australian Charities and Not-for-profits Commission Legislation Review 2018, to reduce the regulatory burden while retaining the transparency required to maintain public trust and confidence.

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“At a minimum, all charities registered with the ACNC must produce an annual information statement which contains financial information as well as information covering their governance and activities,” Mr Frydenberg said.

“The reforms will simplify financial reporting requirements and maintain transparency to ensure charities can dedicate more of their time and resources to assist vulnerable communities.”

New agreement gives charities eased financial reporting
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Adrian Flores
Adrian Flores

Adrian Flores is the deputy editor of MyBusiness. Before that, he was the deputy editor for SMSF Adviser as well as features editor for ifa (Independent Financial Adviser), InvestorDaily, Risk Adviser, Fintech Business and Adviser Innovation.

You can email Adrian at [email protected].

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