When your charity keeps good records of how it is run, this can help you:
- show it is continuing to be run as a not-for-profit and working towards its charitable purposes (and so should remain eligible to be registered as a charity)
- understand whether your charity is in good financial health
- assess whether the right kinds of decisions are being made (operational and financial)
- communicate about your charity’s activities and finances
- prepare reports to meet your reporting obligations to the ACNC, other government regulators, donors/funders and members (if relevant), and
- otherwise show that your charity meets its obligations under the ACNC Act, tax and other relevant laws.
Helps to meet the Governance Standards
Keeping records can also help your charity meet the ACNC Governance Standards, for example, records can show:
- its charitable purpose and not-for-profit nature (Governance Standard 1)
- it is being accountable to its members (Governance Standard 2), and
- it is taking reasonable steps to make sure its Responsible Persons manage financial affairs responsibly, including not operating the charity whilst it is insolvent (Governance Standard 5).
External Conduct Standard 2
The External Conduct Standards apply to the overseas activities and expenditure of charities.
External Conduct Standard 2 set out the requirement for a charity to obtain and keep records necessary to prepare a summary of its activities outside Australia for on a country-by-country basis for each year it operates overseas or sends resources (including funds) overseas.
The ACNC does not currently require charities to provide this information to the ACNC as part of the Annual Information Statement or any other financial reporting.
However, if the ACNC considers there a need to review the overseas activities and expenditure of a charity, that charity needs to be able to produce such records if requested.
A minimum level of compliance with Standard 2 could be satisfied by a charity ensuring it has records that contain the following information:
- the kinds of activities that the charity or third party conducted outside Australia, on a country-by-country basis;
- details of how the charity or third party’s activities outside Australia enabled the charity to pursue and achieve its purpose, on a country-by-country basis;
- details of all expenditure relating to the charity activities outside Australia including details of all expenditure provided to a third party (on a country-by-country basis);
- details of any procedures and processes that the charity used to monitor its overseas operations and activities;
- a list of the third parties that the registered entity worked with outside Australia; and
- details of any documented claims of inappropriate behaviour by the registered entity’s employees or Responsible Persons outside Australia, and subsequent actions taken by the registered entity as a result.
Record-keeping for other regulators
Your charity may need to report to other government regulators, which may have their own record-keeping requirements. For example, you will need to maintain good business records to help manage your charity’s obligations with the Australian Taxation Office (ATO).
If you are following the ACNC record-keeping requirements it is likely that you are meeting most of your obligations to the ATO.