Does your not for profit need an audit or a review?
Requirements for not for profit organisations are driven by a number of factors and with a few agencies involved in regulating, it can seem complex and overwhelming. Your annual revenue can be the decider as to whether you need an audit or a review.
Review and auditing requirements for charities in Western Australia.
The requirement to complete a review or audit of the financial report depends on the licence holder’s reporting category.
These categories are determined by the licence holder’s annual revenue (the total amount of money received through its activities during a financial year):
Small - less than $500,000 in annual revenue
Medium - $500,000 or over but less than $3,000,000 in annual revenue
Large - $3,000,000 or over in annual revenue
The audit and review requirements for each category are as follows:
Small charities - are not required to complete a review or audit of the financial report.
Medium charities - may choose to complete either a review or an audit of their financial report.
Large charities - are required to have their financial reports audited.
From the Department of Energy, Mines, Industry Regulation and Safety
ACNC registered charities with annual revenue over $250,000 must provide financial statements to the ACNC within six months of the end of financial year. Organisations with revenue under that threshold only need to submit the Annual Information Statement – there is no requirement to provide financial statements to the ACNC (but you should refer to your constitution regarding obligations to members).
Charities with annual revenue of less than $1 million can choose whether to have the financial statements audited or reviewed. You can see the ACNC requirements here. Companies limited by guarantee that are registered with the ACNC only need to provide annual reports to the ACNC, not to ASIC.
Read more for ACNC here
A few scenarios to consider;
You are a grant funded not for profit organisation.
In this case you may need to meet your funding obligations. If this is so, you will need to have your accounts audited by a registered company auditor regardless of your annual revenue if that is a part of your agreed funding requirements.
A small company & not ACNC registered?
Small not for profit companies with annual revenue less than $250,000 have much reduced reporting obligations if they are not registered with the ACNC. (If ACNC registered, then the ACNC requirements prevail.) Unless directed to do so by a member or by ASIC, a small company limited by guarantee does not have to prepare a financial report or have an audit, does not have to prepare a directors’ report and does not have to notify members regarding annual reports (but do check your constitution regarding reporting obligations to members).
If revenue is above $250,000 you must prepare financial reports. You may choose to have the accounts audited or reviewed if annual revenue is less than $1 million; over $1 million the accounts must be audited annually by a registered company auditor. You can see the ASIC requirements here.
Incorporated in another state?
Associations have reporting obligations to State or Territory regulators that vary depending on your annual revenue. In a brilliant move to reduce red tape, ACNC-registered charities that are incorporated in the ACT, South Australia or Tasmania no longer have to report to the local regulator, only to the ACNC. If not registered with ACNC, associations need to lodge an annual statement and audited financial statement within six months of end of financial year.
Review (rather than audit)
What is a review, as opposed to an audit? A review is essentially a less in depth audit. It is generally cheaper and takes less time, however the level of assurance is less than an audit. An audit will offer a higher level of examination of financial reports and as such will cost more and requires a certified / qualified auditor.
Would you like to know more or talk with one of our Amazing Team?
If you are unsure and would like to understand your position in more detail - call 97218 218 and ask to speak to one of our accountants.
Your local Accountant. Conveniently located in Bunbury & Dunsborough and servicing the South West business community for over 20 years. We know business. Check out Our Solutions to see what we can do for you.
