Summary of findings from the ACNC NSCOA environmental scan

About the ACNC

The Australian Charities and Not-for-profits Commission (ACNC) is the independent national regulator of charities. The ACNC has been set up to achieve the following objects:

  • maintain, protect and enhance public trust and confidence in the sector through increased accountability and transparency
  • support and sustain a robust, vibrant, independent and innovative not-for-profit sector
  • promote the reduction of unnecessary regulatory obligations on the sector.

To achieve these objects, the ACNC:

  • registers organisations as charities
  • regulates charities, helping them to understand and meet their obligations through information, guidance, advice and other support
  • helps the public understand the work of the not-for-profit sector through research, information, guidance, advice and other support
  • maintains a free and searchable online public register of all registered charities in Australia
  • is working with state and territory governments (as well as individual federal, state and territory government agencies) to develop a 'report-once, use-often' reporting framework for charities.

Acknowledgements

The ACNC would like to express thanks to the following:

  • the NSCOA Advisory Body members, in particular the chair Professor David Gilchrist, for their advice, support and contributions to the environmental scan.
  • Our Community and the Institute of Public Accountants for their contributions.
  • all those who participated in the environmental scan surveys and interviews.
Download the National Standard Chart of Accounts (NSCOA) environmental scan report [PDF 1.94MB]
(Adobe PDF File)

Sections within this report

Executive Summary

The National Standard Chart of Accounts (NSCOA) is an accounting tool for not-for-profit (NFP) organisations, designed to simplify and improve the consistency of financial account categories and terms used.

The ACNC’s environmental scan of the NSCOA set out to analyse the current use and awareness of the NSCOA, as well as the challenges or benefits identified in its use.
The scan examined:

  • Current use and/or awareness of NSCOA among:
    • Not-for-profits (NFPs)
    • government agencies
    • professional advisors
    • other stakeholders
  • Existing and prospective access and support
  • Environmental trends, influences, opportunities, inhibitors
  • Prospects for adding value
  • Deficiencies and areas for improvement

The number of responses to the NSCOA environmental scan numbered more than 750.

Key findings:

  • Respondents wanted the ACNC to continue its support of the NSCOA, with many keen for the ACNC to update and develop it, as well as provide more guidance to help further its use
  • The NSCOA has a significant base of enthusiastic users and supporters However, most NFPs do not use the NSCOA
  • The reason many NFPs have not adopted the NSCOA is because they are happy with their existing accounting system, and because the cost and resources required to convert to the NSCOA exceeds the perceived benefits
  • The level of awareness of the NSCOA was high amongst professional advisors, but far lower among charities, non-government grant makers and government agency staff
  • A significant number of responses suggested some government agencies did not use the NSCOA when requesting financial information from NFPs
  • Some respondents requested that different versions of the NSCOA be produced – for example, simplified and/or sub-sector specific versions.

The ACNC’s response:

In response to the environmental scan, the ACNC has developed a strategy for its ongoing support and development of the NSCOA over the short, medium and long term:
Short term

  • Publish the environmental scan report to promote the NSCOA
  • Consider ways the NSCOA could be updated.

Medium term

  • Develop NSCOA guidance, tools, and webinars to support the sector
  • Continue to promote the NSCOA and its associated benefits
  • Work with stakeholders, including government agencies and software providers, to promote and support the NSCOA’s use.

Long term

  • Work towards the NSCOA being aligned to the Standard Business Reporting (SBR) platform which would assist the ‘report once, use often’ framework for NFPs reporting to all tiers of government.

Introduction

As part of its legislative objects, the ACNC participates in wider dialogue about charities’ financial reporting.

The ACNC’s Financial Reporting Scaffolding Policy sets out the principles that guide the ACNC’s participation in dialogue about financial reporting. The National Standard Chart of Accounts (NSCOA) is one element of the policy.

Overview

What is the NSCOA?

The NSCOA is an accounting tool for NFPs which can be downloaded from the ACNC website.

It includes a standardised list of financial account categories and a comprehensive data dictionary designed for use by NFPs in their accounting systems.

The NSCOA was designed to simplify, and improve the consistency of, accounting categories and terms used by bodies that fund NFPs, as well as NFPs themselves.

As well as the benefits that come from using a standardised set of accounts, there are also red tape reduction benefits for NFPs reporting to government that use the NSCOA.

Following agreement through the Council of Australian Governments in 2010, all States and Territory governments had implemented the NSCOA by 1 July 2011. This means that government funding agencies should be using the NSCOA when requesting financial information from NFPs.

Some NFPs that use a different chart of accounts in their accounting system still use the NSCOA data dictionary to improve their systems.

The NSCOA is a major opportunity to establish a consistent reporting regime for all NFPs, and contributes to the development of a “report-once, use-often” framework for charities.

Where did the NSCOA come from?

The Australian Centre for Philanthropy and Nonprofit Studies at Queensland University of Technology (QUT) developed the NSCOA to address the high levels of unnecessary reporting compliance costs and red tape the NFP sector faced.

QUT handed over administration of the NSCOA to the ACNC on 12 June 2013. The ACNC then established an Advisory Body to oversee the NSCOA’s development.

This body includes representatives from Commonwealth, State and Territory Government agencies, the NFP sector, the research sector and accounting professionals.

The Advisory Body’s first task was to oversee an environmental scan of the NSCOA.

What was the aim of the NSCOA environmental scan?

The NSCOA environmental scan aimed to examine awareness and use of the NSCOA, as well as any challenges or benefits users have identified.
Based on the results of the scan, the ACNC then developed a strategy for the NSCOA.

Who are the stakeholders of NSCOA?

  • NSCOA Advisory Body members
  • Charity sector
  • NFP sector (all other types of not-for-profit organisations)
  • Government agencies
  • Non-government grant makers
  • Professional advisors (accountants)
  • Accounting and governance bodies.

What were the survey respondent numbers and methodology?

Stakeholders Responses
Charity sector (registered charities) 494
NFP sector (all other types of NFPs) 143
Professional advisors (accountants) 52
Non-government grant makers 50
Government agencies 23

The number of responses to the NSCOA environmental scan surveys was substantial, with more than 750 completed.

Many respondents said they would be willing to take part in further research, as well as be updated on developments in the NSCOA. This indicates a high level of stakeholder engagement and interest in the NSCOA.

The methodology used in the environmental scan is detailed in Appendix 1.