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DO I NEED AN AUDIT IN 2021? ADVICE FOR NFPs AND CHARITIES

Updated: Sep 17, 2021

Boards of charities and Not-for-Profit (NFP) entities should assess if the annual financial statements are required to be reviewed or audited on an annual basis.


Charities

The Australian Charities and Not-for-Profits Commission sets the reporting guidelines for registered charities. The need for an audit vs a review is determined by the annual revenue of the organisation, not the structure.


The table below sets out the reporting requirement for particular revenue levels:

Once you have determined if an audit or review is required, you will also need to consider who is appropriately qualified to conduct the audit. For an audit, a registered company auditor is required to meet the requirements of the ACNC. See Reviewing and auditing of financial reports | Australian Charities and Not-for-profits Commission (acnc.gov.au) .


Rules for NFP Associations

A large majority of NFPs are associations - these entities are regulated by the Department of Mines, Industry Regulation and Safety who administer the Association Act 2015 which came into force on 1 July 2016.

The financial reporting requirements for associations are determined by a tiered system with the same revenue thresholds as the ACNC:

Similarly, consideration will be needed to understand who can undertake this review or audit. Under the Association Act an audit may be conducted by a member of Chartered Accountants Australia and New Zealand (CA or FCA), CPA Australia (CPA or FCPA) or Institute of Public Accountants (MIPA or FIPA); or a registered company auditor. See Tiered financial reporting | Department of Mines, Industry Regulation and Safety (commerce.wa.gov.au)


Other Considerations

There are other reasons why an organisation may require an audit. The most common reasons include but are not limited to:

  • The governing documents or constitution may stipulate that an audit is required.

  • For an association where the majority of the members at a general meeting passed a resolution that an audit is to be conducted.

  • The main funding body of the organisation, which is often a government department, requires an audit be conducted.

  • The entity may also be reporting to another agency or financial institution.


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