The requirement for a reviewed or audited annual financial report depends on the size of a charity.
Small charity
For small charities, it is optional to submit a financial report in the Annual Information Statement, so there is no ACNC requirement for a small charity to have its financial report reviewed or audited.
However, we encourage small charities to submit a financial report as part of the Annual Information Statement. And if a small charity's governing documents require it to submit financial statements, it must do so.
Medium charity
Medium-sized charities can have their financial report reviewed or audited. The reviewer’s or auditor’s report must be submitted as part of the financial report in the Annual Information Statement.
The audit or review must be conducted by:
- a registered company auditor (as defined by the Corporations Act 2001); or
- an audit firm; or
- an authorised audit company.
A review may also be conducted by a current member of a relevant professional body (CPA, CAANZ or IPA) who is qualified to undertake a review (in line with the Corporations Act 2001).
Large charity
Large charities must have their financial report audited. The auditor's report must be submitted as part of the financial report in the Annual Information Statement.
The audit must be conducted by:
- a registered company auditor (as defined by the Corporations Act 2001); or
- an audit firm; or
- an authorised audit company.
Note that these are the ACNC's requirements for financial reports. There may be specific requirements for financial reports from other regulators, agencies or even a charity’s own governing document. It is important to consider other requirements when preparing a charity's financial report.
The ACNC has prepared more information for charities preparing annual financial reports.
When having a financial report reviewed or audited, it is important to remember the principle of independence. A review or an audit requires the reviewer or auditor to provide the charity with a signed written independence declaration.
The Accounting Professional and Ethical Standards Board issues the Code of Ethics for Professional Accountants and this covers requirements for service providers to act, and to be seen to act, with independence and integrity.
The Auditing Standards ASA 210, 700, and 800 include requirements for an auditor in considering the financial reporting framework adopted by a charity at different stages throughout an audit process. The auditor’s responsibilities start as a precondition to accepting the audit engagement, and encompass:
- determining whether the financial reporting framework is acceptable,
- evaluating whether the financial report adequately refers to or describes the financial reporting framework, and
- including relevant reporting in the audit report if the financial reporting framework is a special purpose framework.
The ACNC has prepared further information on General and Special Purpose Financial Statements.