Date posted: 23/01/2018 3 min read

It’s time to get reporting and regulation of Australian charities right

The Australian Government’s review of the ACNC legislation is the perfect opportunity to make the changes the NFP sector needs

In Brief

  • The Australian Government is reviewing the ACNC legislation
  • The review is our chance to get the regulatory, reporting and assurance frameworks for NFPs right for the future
  • Have your say by answering five key questions

On 20 December 2017, the Australian Government announced its review of the Australian Charities and Not-for-profits Commission (ACNC) legislation. The purpose of the review is to evaluate the performance of the legislative framework, the regulation of the sector and identify improvements that can be made.

How can you contribute to the review?

Many of our members work for, or provide services to, charities and not-for-profit entities, either in a paid or voluntary capacity. Those with first-hand knowledge of not-for-profit entities and the ACNC legislation are well-placed to provide feedback on how it operates. So that we can advocate on your behalf, we need you to tell us what the issues are - what’s working and what can be improved.

Please take a few minutes to answer the five questions below, which focus on some key themes of the review and the ACNC Acts, including reporting and assurance aspects.

In order to meet the Review Panel’s public submission deadline of 28 February 2018, please use the button below to send use your answers to our five key questions by Friday 16 February. For more information on the review, keep reading.

Five key questions:

  1. Do you think the operation of the ACNC should be extended to the regulation of not-for-profit entities other than charities?
  2. Do you think the information currently provided by charities through their Annual Information Statements and financial reports meets the needs of stakeholders? If not, what can be improved?
  3. Do you think that the financial reporting framework for charities needs to change? How? (Eg changing size thresholds or criteria, the type of information that has to be reported, the basis on which it is prepared, etc)
  4. What other opportunities are there to reduce the regulatory burden for charities and not-for-profit entities?
  5. Do you think that the regulatory approach taken by the ACNC to date has found the right balance between supporting charities to meet their obligations and the need to deter, and appropriately address, misconduct by charities?

Why should you care about the review?

According to the ACNC’s data, in 2016 registered charities had combined revenue of more than $140 billion. 50% of this revenue is received in the form of government grants or donations and bequests. Charities also receive significant help from members of the community in the form of volunteering. The public should be able to understand what happens to the money charities receive and the results of the time they put in. That’s a big part of the reason the sector is regulated.

Because of the great work that charities do, and the nature of the organisations themselves, it’s vital that they are regulated in a way that supports them to deliver their services without overburdening them with red tape. However, many charities are struggling under the weight of compliance costs that are disproportionate to the scale of their operations. A recent Research Report by the Australian Accounting Standards Board (AASB) found that charities are faced with unnecessary complexity, inconsistent and uncertain requirements and financial reports that are not focused on the needs of their stakeholders.

The ACNC legislation has been in place for five years, which has given the NFP sector time to come to grips with the existing requirements and also to identify where further changes or refinements are required. The review is the perfect opportunity to provide that feedback and bring about the changes that the NFP sector needs.

Many charities are struggling under the weight of compliance costs that are disproportionate to the scale of their operations.

What will the review look at?

The review will evaluate the effectiveness and suitability of the ACNC Acts, particularly whether:

  • The objects of the ACNC Acts continue to be relevant
  • The effectiveness of the provisions and the regulatory framework established by the ACNC Acts to achieve the objects
  • The powers and functions of the ACNC Commissioner are sufficient to enable the objects to be met
  • Any amendments to the ACNC Acts are requirement to enable the objects to be achieved and equip the Commissioner to response to existing and emerging issues.

Reducing regulatory burden is a key theme of the review, making it a great opportunity for the NFP sector to provide feedback on the reporting and assurance framework. Nearly 70% of charities have revenue of $250,000 or less, so the reporting framework for charities has to be able to address reporting by both very small and very large entities. Reporting requirements also need to appropriately balance the needs of stakeholders and the needs of the entities themselves. The AASB’s recent Discussion Paper Improving Financial Reporting for Australian Charities explores this further.

Another key question is whether the ACNC’s remit should extend to other classes of not-for-profit entities, beyond just registered charities, as was intended when it was first established.

If you would like to view the full Terms of Reference for the review, they are available on the Treasury website.

While the review is purely focused on the ACNC Acts and NFP sector, the process may lead to similar reform discussions on reporting and assurance frameworks in the private sector.

Treasury Terms of Reference

Terms of reference for review of ACNC legislation

Read more