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An image of Sue Woodward AM

Transparency and accountability in financial disclosures are crucial, as they reflect charities' commitment to manage resources responsibly, and maintain public trust and confidence. Each year, we conduct a detailed review of a selection of Annual Information Statements (AIS) and Annual Financial Reports (AFR) submitted by charities. It’s one of the ways we work to help charities proactively comply with their ACNC obligations.

It is heartening to see most charities provide accurate financial information. The findings from our review of charities’ 2022 reporting were that the majority did not have any material discrepancy when we compared key financial figures in the AIS against the figures in their AFR.

However, I would like to touch on an area where we would like to see improvement in the accuracy of reporting. In 2022 there were changes to Key Management Personnel remuneration (KMP) reporting requirements for large charities – those with revenue of $3 million or more. The aim is to ensure that salaries and other payments made to KMP are transparent, with the public interest in organisations spending money wisely and being accountable for how funds are used to pursue their charitable purpose.

In the 2022 reporting year almost a third of the large charities we reviewed made a material error in the information provided in their AIS about KMP remuneration.

We found that the most common errors occurred where charities said that they only had one or no remunerated KMPs, when the AFR showed otherwise, or that they entered the total KMP remuneration figures incorrectly in the AIS.

When we identify an error we reach out to and work with the charity to resolve the issue. Our reviews play an important role in improving compliance by supporting charities to stay on track. Typically, the error is fixed and we can be confident that it was a mistake rather than any deliberate non-compliance.

We know most charities want to do the right thing and meet their obligations. For example, one of the key obligations is to submit their Annual Information Statement on time. It was wonderful to see that as of 30 June this year, 73% of charities had submitted by the due date.

The introduction of additional requirements for reporting related party transactions for the 2023 reporting period and onwards is another step towards greater transparency. The ACNC remains committed to supporting charities so they can navigate evolving regulatory landscapes with clarity and confidence.

Warm regards,

Sue Woodward AM