Each year, we review 250 Annual Information Statements (AISs) and Annual Financial Reports (AFRs) as part of our work to improve the quality of data on the Charity Register.
This report summarises our findings for 2022.
Note: if we identify a material error based on the criteria listed in ‘What we reviewed’, we work with the charity to resolve any issues. For 2022, we contacted 79 charities with material errors in their AIS or AFR.
| Acronym | Full term |
| AASB | Australian Accounting Standards Board |
| AFR | annual financial report |
| GPFS | General Purpose Financial Statements |
| GPFS-SDR | General Purpose Financial Statements – Simplified Disclosure Requirements |
| SPFS | Special Purpose Financial Statements |
- Key Management Personnel (KMP) remuneration reporting requirements: 28% of charities made a material error when providing KMP information in the AIS.
- Complete financial statements: 76% of AFRs included a complete set of financial statements.
- Material discrepancies between the AIS and AFR: 91% of the charities reviewed did not have any material discrepancy when we compared key financial figures in the AIS and AFR.
Who we reviewed
| Revenue size | Charity size threshold | Number reviewed | Percentage of total |
| Medium | Annual revenue of $500,000 or more, but under $3 million | 149 | 60% |
| Large | Annual revenue of $3 million or more | 101 | 40% |
What we reviewed
For each charity, we looked at the following matters:
- Did large charities comply with the key management personnel remuneration AIS reporting requirements?
- Were there material discrepancies when we compared the financial information in the AIS and AFR?
- Did the AFR include a complete set of financial statements?
- Did the AFR include a signed audit/review report and a signed Responsible People's declaration?
- Did the AFR include appropriate disclosure notes related to Related Party Transactions in compliance with Australian Accounting Standard AASB 124 Related Party Disclosures (or AASB 1060 General Purpose Financial Statements – Simplified Disclosures for For-Profit and Not-for-Profit Tier 2 Entities)?
Key Management Personnel remuneration reporting
From 2022, reporting requirements changed for large charities:
- charities with more than one remunerated key management personnel (KMP) were required to provide additional remuneration reporting in the AIS
- charities that prepared special purpose financial statements (SPFS) were required to disclose KMP remuneration in the notes to the statements in accordance with AASB 124 or AASB 1060 (this requirement was already in place for charities that prepare general purpose financial statements (GPFS)).
AIS reporting
In the AIS, large charities were asked if they had more than one remunerated KMP member. If they did, they were asked to enter the number of KMP they had, and the total remuneration paid to those KMP.
Of the 101 large charities reviewed, 37 had one or no remunerated KMP (38%). These charities were not required to provide further information about KMP remuneration in the AIS.
For the 64 that had more than one remunerated KMP:
- 72% (46) correctly reported KMP figures
- 28% (18) had material errors in the AIS KMP information they reported.
Common material errors occurred where charities:
- stated they had no more than one remunerated KMP in the AIS when the AFR showed otherwise
- entered the total KMP remuneration figure incorrectly in the AIS.
Disclosure of KMP remuneration in the notes to the financial statements
All large charities with more than one remunerated KMP were required to disclose KMP remuneration in the notes to the financial statements.
In the AFR, 93% of charities complied with the KMP disclosure requirements in AASB 124 AASB 1060.
| GPFS | GPFS – SDR | SPFS* | All financial statement types | |||||
| Yes | No | Yes | No | Yes | No | Yes | No | |
| Percentage of charities that included a KMP disclosure in the AFR where required to do so | 84% | 16% | 96% | 4% | 90% | 10% | 93% | 7% |
The table only includes large charities preparing SPFS with more than one remunerated KMP. Charities that had one or no remunerated KMP have been excluded.
Comparing financial information in the AIS to the AFR
To ensure that the financial information in the AIS is accurate, we compared the information in the AIS with the AFR, focusing on ‘Revenue from government’, ‘Donations and bequests’ and ‘Employee expenses’.
91% of the charities reviewed did not have any material difference when we compared the AFR and AIS. Where a material error was identified, this was most commonly due to incorrect reporting of ‘Employee expenses.’
| Does the AIS match the AFR? | Revenue from government | Revenue from donations/bequests | Employee expenses |
| Yes | 86% | 84% | 82% |
| No - immaterial error | 10% | 14% | 13% |
| No - material error | 4% | 2% | 5% |
Complete set of financial statements
Unless transitional reporting arrangements apply, medium and large charities must provide the ACNC with a complete set of financial statements. This includes:
- a statement of profit or loss and other comprehensive income (combined or separate)
- a statement of financial position
- a statement of cash flows
- a statement of changes in equity (optional in some cases if applying AASB 1060)
- notes to the statements.
76% of charities originally provided the ACNC with a complete set of financial statements.
While all 250 charities provided a statement of profit or loss as part of the AFR, only 78% provided a statement of other comprehensive income.
Compliance rates for the other four components of the AFR were high (each component had a 90% or higher compliance rate).
| Financial statement component | Percentage included in AFR |
| Statement of profit or loss | 100% |
| Statement of financial position | 99.6% |
| Notes to the statements | 97% |
| Statement of cash flows | 92% |
| Statement of changes in equity | 91% |
| Statement of other comprehensive income | 78% |
| Charities that provided a complete set of financial statements | 76% |
Signed audit/review reports and Responsible People’s declaration
In addition to a complete set of financial statements, the AFR must also include:
- 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).
94% of AFRs included the auditor or reviewer report. Of these, 97% were signed and dated.
Similarly, 95% of the charities reviewed attached a Responsible People’s declaration to the AFR. 95% of these were signed and dated.
The Responsible People’s declaration must include a ‘solvency statement,’ which states whether the charity is able to pay all of its debts, as and when they become due and payable. 97% of declarations reviewed included a solvency statement.
Related party transaction reporting
In addition to key management personnel remuneration reporting, accounting standards AASB 124 and AASB 1060 require disclosures about other related party transactions in a financial report.
For the 2022 AIS and AFR, these disclosures were:
- mandatory for charities preparing any type of GPFS
- optional for charities preparing SPFS
Charities using GPFS-SDR had the highest compliance. 98% provided general related party transaction disclosures and 97% included required detailed disclosures.
| Percentage of AFRs that included: | GPFS | GPFS – SDR | All financial statement types | |||
|---|---|---|---|---|---|---|
| Yes | No | Yes | No | Yes | No | |
| Related party disclosures (general) | 84% | 16% | 98% | 2% | 95% | 5% |
| Detailed disclosure of related party transactions | 88% | 12% | 97% | 3% | 96% | 4% |
17% of charities using SPFS voluntarily provided general related party transaction disclosures. 12% included a detailed disclosure. From the 2023 AIS and AFR, charities preparing SPFS will be required to comply with AASB 124 or AASB 160.
Other findings
- 7% of auditor/reviewer reports had a modified opinion/conclusion, primarily in relation to cash donations. Where charities receive cash donations, particularly donations collected by third parties, it may not be practical for auditors to confirm the exact amounts collected until the moment they are deposited in a charity’s bank account.
- 32% of auditor/reviewer reports had an emphasis of matter. Of those charities with an emphasis of matter paragraph, only 8% were about going concern (which may indicate that the auditor/reviewer has a concern about financial sustainability).
- 64% of charities correctly selected the type of financial statements they prepared in their AIS. The most common error identified involved charities that prepared SPFS incorrectly selecting GPFS.