All charities – except those registered with Office of the Registrar of Indigenous Corporations (ORIC) – must submit an Annual Information Statement each year.
As part of this obligation, many charities must also submit an annual financial report.
An annual financial report provides the public with extra information and an additional level of assurance about a charity's operations and financial affairs throughout a reporting period.
Medium and large charities, except for those that are Basic Religious Charities, must submit an annual financial report as part of their Annual Information Statement.
For small charities, submitting an annual financial report is optional. However the ACNC encourages them to do so, and if a small charity's own governing document requires it to submit a financial report, it must do so.
This guidance provides details about annual financial reports, and includes a checklist that covers key issues to consider when preparing your charity’s annual financial report.
Providing an annual financial report helps registered charities meet their legislative requirements as set out in the ACNC Act, and is also an indication of good governance.
Generally, annual financial reports must be prepared as required by the ACNC Act and ACNC Regulations, and must meet ACNC requirements.
They must also comply with the Australian Accounting Standards set by the Australian Accounting Standards Board (AASB) and give a true and fair view of the financial position and performance of the charity.
Large charities must have their annual financial report audited. Medium charities can have their annual financial report either audited or reviewed.
As a minimum, medium and large charities must provide the ACNC with the following information when submitting their annual financial report:
- a statement of profit or loss and other comprehensive income1
- a statement of financial position
- a statement of changes in equity1
- a statement of cash flows
- notes to the financial statements
- a signed and dated Responsible People’s declaration about the statements and notes (the ACNC has a template declaration available)
- for medium charities, a signed and dated reviewer's report or auditor's report; for large charities, a signed and dated auditor's report (the ACNC has templates for reviewer's and auditor's reports).
1Under certain circumstances, the ‘other comprehensive income component’ and ‘statement of changes in equity’ can be optional. For more information, refer to the first item in the annual financial report checklist on this page.
A charity's financial statements must be either General Purpose Financial Statements (GPFS) or Special Purpose Financial Statements (SPFS).
The type of financial statements a charity must prepare depends on whether it is classed as a reporting entity. For more information, read the ACNC’s guidance on General Purpose Financial Statements, Special Purpose Financial Statements and reporting entities.
There are requirements for auditors when considering the financial reporting framework a charity adopts, and those responsibilities span different stages of the audit process. The Auditing and Assurance Standards Board (AUASB) provides guidance to auditors about these responsibilities. For further information, read the ACNC’s guidance on the reviewing and auditing of financial reports.
Our annual financial report checklist covers key issues for you to consider and includes helpful hints for preparing your charity’s annual financial report.
Notes supporting the checklist
Medium and large charities’ financial reports must meet ACNC requirements, except for a few situations where the ACNC still accepts the financial reports that a charity submits to another regulator under our transitional reporting arrangements.
Incorporated associations and fundraisers are no longer required to submit financial reports directly to their state or territory regulator –they can instead submit them to the ACNC using our streamlined reporting arrangements.
Where an accounting standard is not compulsory for charities preparing Special Purpose Financial Statements, it may still be appropriate to apply the standard to ensure your charity’s financial statements and notes provide a true and fair view. Where relevant, we have included references to the specific accounting standards in the checklist.
Note that this checklist does not cover every possible scenario and some requirements may not apply depending on the type of financial report and a charity’s individual circumstances. You should seek professional advice for any specific accounting matters relevant to your charity.
Annual financial report checklist
|ACNC / AASB Financial report requirements||AASB or ACNC Reference|
|Does your financial report include a complete set of financial statements? This includes:
Does your financial report present information about the legislative basis of preparation, including a note to disclose that the charity is a not-for-profit entity for the purpose of preparing the financial statements?
That charities prepare a financial report that meets the requirements of the Australian Charities and Not-for-profits Commission (ACNC) Act 2012 (ACNC Act).
Does your financial report include notes required by all relevant Australian accounting standards to explain the financial statements?
Charities that are not reporting entities and prepare Special Purpose Financial Statements must ensure they include any disclosures required by the following standards:
Charities preparing special purpose financial statements (SPFS) now have the option to apply the simplified disclosure requirements in AASB 1060 General Purpose Financial Statements – Simplified Disclosures for For-Profit and Not-for-Profit Tier 2 Entities.
This option applies for the disclosure of key management personnel compensation only for the 2022 reporting period onwards and for all other disclosures from the 2023 reporting period onwards. For more information, please refer to Standards and Financial Reporting.
*Amendments to the ACNC regulations introduced AASB 124 as a new mandatory accounting standard. Please note certain exemptions are available when applying AASB 124. For more details, please refer to key management personnel remuneration and related party transactions.
|Does your financial report include comparative figures for the current and previous reporting periods?|
Does your charity have appropriate line items presented in the statement of profit or loss and statement of financial position?
Charities should consider accounting standard requirements regarding:
|Does your charity’s financial report disclose the charity’s significant accounting policies?|
|Have appropriate disclosures about accounting estimates, judgements and errors been made?|
|Has the cash flow statement been classified between operating, investing and financing activities?|
If your charity prepares Special Purpose Financial Statements, do the notes include the additional disclosures required by AASB 1054? The required disclosures include:
|AASB 1054 paragraph 9A|
|Have you reviewed the ACNC’s Best Practice Disclosure Guide in regards to revenue from government?|
Does your charity’s financial report include disclosure notes about key management personnel compensation?
If applicable, these are compulsory for:
AASB 124 paragraphs 17 and 18A
Does your charity’s financial report include disclosure notes about related party transactions?
If applicable, these are compulsory in annual financial reports up to 2022 for reporting entities and ACNC approved reporting groups.
For annual financial reports from 2023, medium and large charities (except for Basic Religious Charities) are required to disclose related party transactions in accordance with the relevant accounting standards.
|Does your charity’s financial report include a signed and dated Responsible People's declaration?||Section 60.15 ACNC Regulation 2013|
Does your charity’s financial report include an auditor’s report (or reviewer’s report for medium charities) signed by an appropriate auditor/reviewer?
For more information refer to ACNC audit/review report templates
|Subdivision 60C ACNC Act
Does the auditor’s or reviewer’s report confirm the financial report meets the requirements of the ACNC Act?
For more information, refer to ACNC audit/review report templates
|Subdivision 60C ACNC Act|
Stay up to date
Charities and preparers of the financial statements should also make sure they are aware of any changes to Australian accounting standards.
More detailed information about accounting standards and financial reporting is available on the ACNC website, as well as on the AASB website.
Refer also to guidance in our Annual Financial Report Best Practice Guide to ensure your financial report includes information important to users of charity financial reports.