Australian Accounting Standards Board

The Australian Accounting Standards Board (AASB) is the Australian Government agency responsible for developing, issuing and maintaining accounting standards.

Accounting standards set out the required accounting treatment for particular types of transactions and events. There are also accounting interpretations which specifies the requirements of standards in application to particular transactions or events. These accounting requirements affect the preparation and presentation of a charity’s financial statements.

The ACNC Act specifics that medium and large charities must comply with the Australian Accounting Standards when preparing financial statements. Charities will need to make an assessment whether they are a ‘reporting entity’ which determines the type of financial statements that must be prepared.

Annual financial report: General and special purpose statements

The Australian Auditing and Assurance Standards Board (AUASB) is the Australian Government agency responsible for developing, issuing and maintaining auditing and assurance standards.

Auditing standards set out the requirements and provide application and other explanatory material on the responsibilities of the auditor and the assurance practitioner when undertaking an audit or review of the financial report. The standards also set out the requirement of the form and content of the audit or review report.

The ACNC Act specifies that a review or audit must be undertaken in accordance with the auditing standards.

Review or audit of financial reports

The Accounting Professional & Ethical Standards Board (APESB) is an independent, national body that sets the code of ethics and professional standards with which accounting professionals who are members of CPA Australia, Chartered Accountants Australia & New Zealand or Institute of Public Accountants must comply.

Accounting and auditing or assurance standards change from time to time. Your accountant and auditor should be aware of the upcoming changes that are applicable to your charity.

Accounting Standards

New disclosure requirements for Not-for-profits (NFP) preparing Special Purpose Financial Statements (SPFS) take effect for annual reporting periods ending on or after 30 June 2020.
The new disclosures will include:

  • The basis on which the decision to prepare SPFS was made
  • Whether the SPFS overall comply with the recognition and measurement requirements of the Australian Accounting Standards (except for consolidation and equity accounting)
  • Application of the consolidation and equity accounting requirements

Charities are not expected to change their existing accounting policies. The AASB has prepared a high level summary to assist with understanding these new disclosure requirements required by AASB 2019-4.

The following new accounting standards took effect for annual reporting periods beginning on or after 1 January 2019:

  • AASB 15 Revenue from contracts with customers
  • AASB 1058 Income of Not-for-profit Entities

This means that the revenue and income recognition contained in AASB 1004 Contributions and AASB 118 Revenue will no longer be applicable.

It is important charities consult with their accountants to understand the new accounting standards as this will have an impact on how the size of your charity is calculated as well as the preparation of your charity’s financial statements.

The following accounting standards have been amended which takes effect for charities applying these standards:

  • AASB 9 Financial instruments (effective from annual reporting periods on or after 1 January 2018)
  • AASB 16 Leases (effective from annual reporting periods on or after 1 January 2019)

The ACNC has also developed general guidance on how some of the new accounting standards may affect common aspects of accounting for charities.

Auditing Standards

The following auditing standards have been amended which takes effect annual reporting periods ending on or after 15 December 2016:

  • ASA 700 Forming an Opinion and Reporting on a Financial report
  • ASA 800 Special Considerations – Audits of Financial Reports Prepared in Accordance with Special Purpose Framework
  • ASA 705 Modifications to the Opinion in the Independent Auditor’s Report

The ACNC has developed audit and review templates that are designed for use by auditors and were developed with the assistance of the AUASB.

The AUASB has issued a bulletin outlining the Auditor’s Responsibilities and the Financial Reporting Framework. It described the Auditor’s Responsibilities and the Financial Reporting Framework for evaluating whether the financial report adequately refers to or describes the applicable financial reporting framework as part of the auditor’s work.

Auditors are reminded that as a precondition to accepting the engagement, to determine whether the Financial Reporting Framework that is applied in the preparation of the financial report is acceptable.

For more information on each of the standards, refer to the AASB website and the AUASB website.

Code of Ethics Standards

APESB issued a restructured APES 110 Code of Ethics for Professional Accountants (including independence Standards) (Restructured Code) in November 2018, which takes effect from 1 January 2020. The Restricted Code includes a new user guide and updated glossary, separation of requirements from guidance material, enhanced conceptual framework and an increased focus on compliance with fundamental principles.

For more information, including supporting material for the Restructured Code, refer to the APESB Basis for Conclusion and the APESB's Mapping Table.

The ACNC works closely with the standard setters on matters relating to the charities and not-for-profit sector.

The AASB has a project to clarify and simplify the Australian Financial Reporting Framework for Not-for-profit entities. The aim is to develop financial reporting requirements that would apply to the financial statements of charities and not-for-profit entities. More information about this project can be found at the AASB website.

The standard setters also regularly issue exposure drafts and consultation papers as part of their consultative process before making a new Australian standard or amending an existing standard. You can participate in their consultative process by submitting your comments to: