2024 Year end tax planning and financial reporting guide - unlocking tax and reporting insights for year end success > Download the full guide
NFP ACNC Activities | January 2021
28 January 2021 | Minutes to read: 5

NFP ACNC Activities | January 2021

By William Buck

ACNC reports more than $195 million in revenue errors in 2018

The Australian Charities and Not-for-profits Commission has disclosed errors totalling $195,522,440 in 2018 information statements and financial reports. 

The faults were catalogued in the commission’s Reporting statistics for the 2018 reporting period 

Amendments to the ACNC register have corrected $195,522,440 in revenue and $614,226,373 in assets.  

Key findings included:  

  • Nearly 70% of charities selected the correct type of financial report to submit with their AIS. Of the remainder, the most common errors were the misclassification of the reduced-disclosure requirement in general-purpose financial statements and special-purpose financial statements as general-purpose statements. 
  • 21incorrectly stated they were using transitional reporting arrangements – where the ACNC accepts financial reports prepared for and submitted to other regulators. These charities stated that they had to report to another regulator when in fact there was a streamlined reporting arrangement in place with the regulatorThe charities were required to submit a report only to the ACNC. 
  • 17% incorrectly identified their financial report as consolidated’ when it was in fact a singlecharity report. 
  • 42% that submitted a consolidated report provided figures for the group instead of information for an individual charity. 
  • Three quarters of financial reports included a complete set of financial statements. Of the remaining 25%, the most common missing figures were statements of changes in equity and cash flow,.  
  • A lack of disclosure about whether charities were for-profit or not-for-profit for financial reporting purposes, and  
  • The absence of whether a legislative framework under which the financial report was preparedcomplied with the ACNC Act. 

The commission stressed that it would continue to review charities’ reports to ensure compliance with ACNC requirements. It would ensure that financial information charities provided matched the information in their formal statements. 

ACNC releases Annual Report

The ACNC has tabled its 2019–20 Annual Report, revealing insights into the charity sector and the commission’s activities. 

To allow charities to focus on relief and recovery efforts for bushfires, the commission paused most compliance activity for charities in bushfire-affected areas unless there was a significant ongoing riskof non-compliance. 

The commission provided annual information statement extensions for around 7000 affected charities and prioritised charityregistration applications related to bushfires. 

Dr Gary Johns, ACNC Commissioner, said a critical part of the ACNC’s work is to provide information about charities to the public.  

We have seen the ACNC charity register visits significantly grow year on year, with more than 3.2 million searches last financial year,” said Dr Johns. 

When COVID-19 hit Australia, the commission helped charities with their governance and operations by publishing news, information, and guidance on its website. It also adjusted its approach to regulation, deferring information-statement due dates for more than 18,000 charities and suspended some investigations. 

The ACNC has continued to work with other government agencies to streamline reportingrequirements across jurisdictions.  

Highlights include a new law passed to relieve Queensland charities of duplicated annual financial reporting, and bilateral negotiations with several states to reduce red tape for fundraisers. 

Dr Johns said the importance of the charity sector should not be underestimated as it’s crucial to supporting the Australian community and employs 10% of Australians.” 

We directed a substantial amount of our efforts this year to helping charities navigate through these tough times and to reducing the burden on them as much as possible.” 

Key statistics include: 

  • There was a significant rise in activity on the ACNC website.  Page views totalled more than 12 million– six times more than the previous year 
  • There were 3.2 million register searches – more than three times the previous year’s 
  • A total of 32,602 phone calls and 13,362 written enquiries were received during the year 
  • 2568 new charities were registered 
  • There were 2102 concerns about charities, down from 2323 the previous year, most having beenreceived from the public or members of a charity.  The most common concerns were about perceived mismanagement of funds and individuals obtaining a private benefit from a charity, and 
  • 79 investigations were finalised, resulting in 18 charities having their registrations revoked. That compares with 12 revocations in the previous year from 100 investigations. 

The ACNC’s 2019-20 annual report is available here. 

Check your NFP’s purpose

Many charities’ operations are affected by COVID-19.  This might mean that some or all of them mightneed to be modified or even temporarily halted. 

The ACNC has stressed the importance of charities keeping stakeholders informed about what they are doing and why.  Regular communication about charities’ changed activities should be a priority.  

The commission has stressed that if charities’ activities change, they need to match their charitable purpose – what the charities were set up to achieve.  

Charities need to consider financial moves that might include: 

  • Using financial reserves 
  • Assessing their eligibility for Federal, State, and territory stimulus packages 
  • Considering other financial assistance that’s available (for example, business-relief packages from banks and financial institutions) 
  • Assessing future cash flows and completing a forecast – or adjusting their forecasts – considering current events 
  • Speaking to funders about the effects of cancelling or delaying activities that are part of funding agreements 
  • Understanding fixed costs and when they will need to be paid. Not committing to any more expenditure if possible, and 
  • Reviewing existing liabilities (for example, exploring options with banks and financial institutions, including deferring loan repayments). 

Responsible persons should speak to their charity’s accountant and auditor in preparation of budgets, forecasts, and financial statements. 

charity that has decided to cancel or postpone a fundraising event might need to decide what to do with money already committed (for example, through ticket sales or other purchases).    

Questions needing answers might include: 

  • Will the money be refunded – either immediately or in time? 
  • Will the charity hold the money until the fundraiser is rescheduled?  
  • Will the charity commit the money towards a future event or effort? 

The ACNC emphasises that transparency is paramount.  

It’s important that a charity communicates clearly with supporters and other stakeholders on why it made the decision as well as measures it has in place to ensure that funds are properly refunded or used in line with donors original intent and the charitys charitable purpose. 

ACNC sets up a CVOID-19 webpage

The ACNC has recognised that a charity’s usual operations might be affected by COVID-19 and has set up a dedicated web page to help. 

Topics covered include: 

  • ACNC compliance during COVID-19 
  • Federal Government support for eligible charities 
  • Charity meetings and AGMs 
  • Charity operations and governance 
  • Charity financial considerations 
  • Charity reserves 
  • Charity fundraising 
  • State and territory stimulus packages, and  
  • Other useful resources and information 

The ACNC has also updated its guidance on record-keeping, including more information on keeping records when working remotely and from homeClick here for more information.  

Sanctions for National Redress Scheme non-joiners

The Federal Government plans to introduce sanctions for charities that fail to join the National Redress Scheme for victims of institutional child sexual abuse. 

The changes include a new governance standard and an amendment to the Australian Charities and Not-for-Profits Commission Act 2012. 

Under the new standard, registered charities will be required to take all reasonable steps to become a participating non-government institution in the scheme if a claim has been, or is likely to be, made against them. 

The amendment to the ACNC act will mean that religious institutions will fail classification as ‘basic religious charities’ and exemption from ACNC governance standards if they have been named in an application but have not joined the scheme. 

Affected charities risk losing charity registration and access to a range of Commonwealth charity tax concessions, which is a serious penalty,” ACNC commissioner Dr Gary Johns said. 

He added that no action would be taken until these changes became law. 

Minister for Families and Social Services Anne Ruston said the ACNC would be given the power to deregister a charity that did not take reasonable steps to participate in the scheme. 

Senator Seselja said a new ACNC governance standard would require registered charities to take all reasonable steps to become a participating non-government institution in the scheme if a claim hadbeen, or was likely to be, made against them. 

The Government will also introduce legislation this year which amends the definition of a basic religious charity in the Australian Charities and Not-for-Profits Commission Act 2012 to remove a religious institution’s eligibility to be classified as a BRC if it has been named in an application but refuses to join the Scheme,” he added. 

Charities failing to join the scheme will be subject to ACNC compliance powers, including deregistration. Deregistration would result in the entity losing access to a range of Commonwealth benefits, tax, and other concessions. 

Relevant legislation was introduced into parliament through the Treasury Laws Amendment (2020 Measures No. 6) Bill 2020 to give effect to changes to the BRC definition. 

About 80 institutions which provided an intent to join before the 30 June 2020 deadline are reminded that they had until 31 December to complete the steps to sign on or they will be named and face sanctions. 

To date, the federal, state and territory governments, and 358 non-government institutions are participating. 

Further information about the National Redress Scheme is available on the website www.nationalredress.gov.au. 

Related Insights