Each year, we review 250 Annual Information Statements (AISs) and Annual Financial Reports (AFRs) as part of our work to improve the accuracy of information published on the Charity Register.
This report summarises our findings for the 2023 reporting period, where we reviewed 201 charities and 49 ACNC approved reporting groups.
Note: Unless otherwise indicated in this report, references to charities include approved groups.
For 2023, our reviews focused on charities that were more likely to have made errors. We analysed data to identify charities with very significant variations in reported financial figures in comparison to their previous year’s reporting.
For this reason, the findings in this report are not representative of the general quality of charities’ financial reporting.
Overall, 57% of charities had material errors in their reporting, which required them to submit either a corrected AIS or complete AFR to the ACNC. Our findings included the following:
25% of large charities we reviewed made one or more key management personnel (KMP) remuneration errors when completing their AIS
82% of charities did not have any material differences when we compared the financial information in their AFR with the financial information in their AIS
93% of charities correctly completed related party transactions questions in their AIS.
Who we reviewed
Our reviews included:
- 49 reporting groups
- 50 charities from Queensland that were subject to transitional reporting relief
- 22 charities that had made errors in previous financial reporting reviews
- 129 charities that we identified as likely to have made errors through data analytics as outlined above.
Seventy-five reviews (30%) focused on medium charities (where annual revenue is $500,000 or more but less than $3 million). The other 175 focused on large charities (where annual revenue is $3 million or more).
What we reviewed
Our reviews focused on the following questions:
- Did large charities comply with KMP remuneration reporting requirements?
- Did charities comply with related party transaction requirements?
- Were there material discrepancies when we compared the financial information in their AIS and AFR?
- Did charities’ AFR include a complete set of financial statements?
- Did their AFR include a signed Responsible People's declaration?
- Did their AFR include a signed audit/review report?
- For charities that provided a consolidated financial report, did their AIS financial information relate to the registered charity or group?
1. KMP remuneration reporting
Background
From 2022, reporting requirements changed for large charities:
- 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 them.
- charities that prepared special purpose financial statements were required to disclose KMP remuneration in the notes to the statements in accordance with accounting standards AASB 124 or AASB 1060 if they had more than one remunerated KMP (this requirement was already in place for charities that prepared general purpose financial statements)
Findings
Of the 175 large charities reviewed, 25% answered KMP questions in their AIS incorrectly.
Material errors occurred where charities:
- stated they had no more than one remunerated KMP in their AIS when their AFR or other information showed otherwise
- entered the wrong number of remunerated KMP in their AIS
- entered the total KMP remuneration figure incorrectly in their AIS.
Ninety-three percent of relevant charities complied with the requirement to disclose KMP remuneration in the notes to the financial statements in accordance with AASB 124 or AASB 1060.
2. Related party transaction information
Background
In addition to KMP remuneration reporting, accounting standards AASB 124 and AASB 1060 require disclosures about related party transactions in a financial report.
From 2023 these disclosures became mandatory, regardless of the type of financial statements prepared.
New questions were also added to the AIS. From 2023, charities were required to answer questions about whether they had reportable related party transactions and, if so, detail the types of transactions that occurred.
Findings
Ninety-three percent of charities correctly answered these questions in their AIS.
| Error type | Percentage of AISs |
| Charity incorrectly stated they did not have reportable related party transactions when AFR showed otherwise | 6% |
| Incorrect related party transaction categories selected | 1% |
Only 3% of the AFRs we reviewed had a material error due to the charity not disclosing related party transactions appropriately.
3. Comparing financial information from the AIS to the AFR
Background
The AIS requires charities to complete a summary income statement and balance sheet.
We compared the financial information in charities’ AFRs with the financial information in their AISs to check the accuracy of data transposition. We focused on:
- revenue from government including grants
- revenue from donations/bequests
- employee expenses
- net assets/liabilities.
Findings
Eighty-two per cent of the charities reviewed did not have any material difference when we compared the AFR and AIS.
Following the reviews, the ACNC contacted the remaining 18% of charities. This resulted in corrections of $2.8 billion in total revenue and $5.8 billion in total assets.
| Does the AIS match the AFR? | Revenue from government | Revenue from donations/bequests | Employee expenses | Net assets/liabilities |
| % of material errors identified | 2% | 4% | 6% | 7% |
4. Complete set of financial statements
Background
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.
Findings
Eighty-five per cent of the financial reports we reviewed included a complete set of financial statements.
All financial reports reviewed included a statement of profit or loss and a statement of financial position. Eighty-six per cent included a statement of other comprehensive income.
| Financial statement component | Percentage correctly submitted |
| Statement of profit or loss | 100% |
| Statement of financial position | 100% |
| Notes to the statements | 98% |
| Statement of cash flows | 95% |
| Statement of changes in equity | 91% |
| Statement of other comprehensive income | 86% |
5. Signed and dated Responsible People’s declaration
Background
In addition to a complete set of financial statements, the AFR must include a signed and dated Responsible People’s declaration that confirms:
- there are reasonable grounds to believe that the registered entity is able to pay all of its debts, as and when they become due and payable (solvency statement), and
- the financial statements and notes meet ACNC requirements.
The ACNC has a template declaration available for use.
Findings
Ninety-nine per cent of the charities we reviewed attached a Responsible People’s declaration to the AFR. Of these, 94% were signed and dated, and 98% included a solvency statement.
6. Signed and dated reviewer or auditor report
Background
In addition to a complete set of financial statements, AFRs must also include a signed and dated reviewer’s or auditor’s report. Requirements differ based on charity size:
medium charities can provide a reviewer's report or auditor's report
large charities must provide an auditor's report.
The ACNC has templates for reviewer's and auditor's reports.
Findings
Ninety-four per cent of AFRs included the auditor or reviewer report. Of these, 98% were signed and dated.
Six per cent 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.
Where the report included an emphasis of matter, this generally related to ‘basis of preparation’ for those preparing special purpose financial statements or limitations in relation to cash donations.
7. Consolidated financial reports
Background
In some situations, charities may prepare consolidated financial reports (which include information for multiple entities) in accordance with the Australian Accounting Standards.
Although the ACNC can accept consolidated financial reports, the financial information in the AIS must relate to the registered charity or group.
Findings
Twenty-seven per cent of AFRs provided by charities or groups were consolidated financial reports. Of these, we found that:
- Fourteen per cent of AFRSs we reviewed incorrectly reported financial information for the consolidated entity rather than the registered charity
- Three per cent of AFRs we reviewed were from groups that incorrectly included information about non-registered entities, when financial information in these AFRs should be limited to registered charities within the group.