Registered Charities in Australia Audit Requirements
Charities in Australia are regulated by the Australian and Not-For-Profits Commission Act (ACNC Act) 2012. Prior to the introduction of this Act, reporting obligations for Charities were essentially determined by either provisions of Corporations Act 2001 or the Associations Incorporation Act 1981 and varying other acts depending on the industry. This created complexity for charities committee members in assessing audit requires.
The ACNC Act, just like ASIC, contains a ‘tiered’ approach to requiring audits based on the size of your charity. The size of your charity in turn is determined by the amount of revenue earned in the previous financial year. The below table sets out the audit requirements for various sizes of charities.
| Charity Revenue | Charity Size | Audited Accounts Required? | Annual Information Statement Required? |
| Less than $500k | Small | No | No |
| $300k to $3mil | Medium | Yes | Yes |
| $3mil + | Large | Yes | Yes |
You will note from the above that all charities, regardless of size, are required to lodge an annual information statement, a document which does not require an audit in itself. This document effectively outlines the charitable activities undertaken and is a means for the ACNC to ensure that the entity is, in fact, continuing as a charity.
If a charity ventures into non-charitable undertakings, this may result in the revocation of a ‘registered charity status’, so care needs to be taken when entering into any new ventures.
Even if your charity does not meet the size criteria for a compulsory audit, having an audit undertaken, particularly in the early stage of the charity’s life cycle, may identify risky areas that may not have previously been considered. Typically, charities lack ‘segregation of duties’ due to low staff numbers. In these instances, compensating controls can be put in place to reduce these risks to an acceptable level for management and the board.
CJG services can provide the board with practical recommendations as part of our audit work, which can evolve over time as the charity invariably grows.
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