Annual Financial Report: General and Special Purpose Statements

What financial information must a charity provide to ACNC?

Unless a charity is registered with Office of the Registrar of Indigenous Corporations (ORIC), all registered charities must submit an Annual Information Statement (AIS). 

The AIS contains a section on charity finances.

If your charity is medium-sized or large , you must also submit an Annual Financial

Report (AFR) when submitting your AIS.

If your charity is small , providing an AFR is optional but encouraged.

What is an Annual Financial Report?

An AFR provides the public with additional information and assurance about the operations and financial affairs of a charity over a reporting period.  From a charity perspective it serves to meet the legislative requirements of the regulator, and is an indicator of good governance.

The ACNC requires that charities provide at minimum the following information for medium and large charities when submitting their AFR:

  • statement of profit or loss and other comprehensive income
  • statement of financial position
  • statement of changes in equity
  • statement of cash flows
  • notes to the financial statements
  • a signed and dated responsible persons’ declaration about the statements and notes (acnc.gov.au/templates)
  • a signed and dated reviewer's report/auditor's report (for medium charities) or  a signed and dated auditor's report (for large charities) (acnc.gov.au/templates).

The financial statements of a charity must be either General Purpose Financial Statements or Special Purpose Financial Statements.

What type of financial statements should my charity submit?

To decide which type of financial statements your charity needs to prepare your charity must first establish whether it is a ‘reporting entity’.

What is a reporting entity?

Generally speaking, if people use and rely on your charity's financial statements to help them make decisions (for example, about how to spend money) that cannot directly obtain the information they require, then your charity is most likely a reporting entity.

The Australian Accounting Standard AASB 1053 defines a reporting entity as:

'an entity in respect of which it is reasonable to expect the existence of users who rely on the entity's general purpose financial statements for information that will be useful to them for making and evaluating decisions about the allocation of resources. A reporting entity can be a single entity or a group comprising a parent and all of its subsidiaries'.

Ultimately, whether your charity is a reporting entity will depend on a number of factors, as well as your charity’s particular circumstances. Your auditor or reviewer should also make a decision about the appropriateness of your charity’s classification as a non-reporting entity.

Consideration of these factors will help determine whether there are likely users of your charity’s financial statements. Where it is not apparent that people use and rely on your charity’s financial statements, the primary factors to be considered are:

  • Is there a spread of ownership/membership or a level of separation between management and owners/ members/ others that have an economic interest in your charity? The greater the separation of membership from management, the more likely members will use and rely on your charity’s financial statements.
  • Does your charity have economic or political importance/influence? The more economic or political importance/influence your charity has, the more likely people will use and rely on your charity’s financial statements.
  • Is your charity large, does it have a high level of sales/assets/debt/funding from governments or other parties, or does it have a high number of employees? The larger your charity is, the higher its level of sales/assets/debt/funding, or the higher its number of employees, the more likely people will use and rely on your charity’s financial statements.

Statement of Accounting Concepts SAC 1 Definition of the Reporting Entity contains further details about the definition of a reporting entity and the factors listed above. Your reviewer or auditor may also help you determine whether your charity is a reporting entity.

If in doubt please speak to an auditor, reviewer or financial expert for guidance.

General or Special Purpose Financial Statements?

The ACNC Regulations state that your charity’s financial statements and notes must meet applicable Australian Accounting Standards, and provide a true and fair view of your charity’s financial position and performance.

The ACNC permits three types of financial statements:

  • General Purpose Financial Statements - Full (Tier 1);
  • General Purpose Financial Statements - Reduced Disclosure Requirements (RDR) (Tier 2); &
  • Special Purpose Financial Statements

General Purpose Financial Statements (your charity is a reporting entity)

If your charity is a reporting entity it must submit general purpose financial statements (GPFS) that comply with all applicable Australian Accounting Standards. The standards are issued by the Australian Accounting Standards Board (AASB) and provide guidance for presentation, measurement and disclosure of financial information for your charity.

Your charity can also choose to report:

  • Full - GPFS; or
  • RDR - GPFS. 

Those operating under Reduced Disclosure Requirements are allowed significantly less disclosure in the notes to their financial statements compared to full GPFS. However their statements are still considered to be GPFS.

Special Purpose Financial Statement (your charity is not a reporting entity)

If your charity is not a reporting entity, it can submit Special Purpose Financial Statements (SPFS) to the ACNC.

This means you must apply as a minimum the following six accounting standards:

  • AASB 101, Presentation of Financial Statements
  • AASB 107, Statement of Cash Flows
  • AASB 108, Accounting Policies, Changes in Accounting Estimates and Errors
  • AASB 1031, Materiality [1]
  • AASB 1048, Interpretation of Standards
  • AASB 1054, Australian Additional Disclosures.

Even if your charity is not a reporting entity, you may choose to report using general purpose financial statements.

More information

Related resources

External resources

[1] This is now superseded by AASB 108, Accounting Policies, Changes in Accounting Estimates and Errors