Understandability and Transparency of the Financial Statements of ...

Report of the Inquiry into the Definition of Charities and Related Organisations
(Charities Definition Inquiry, 2001) which recommended the establishment of an
independent administrative body for the charitable and related sector;
Disclosure regimes for charities and not-for-profit organisation (Senate Standing
Committee on Economics, 2008) which also recommended a single independent
regulator for NFPs; and
Contribution of the Not-for-Profit Sector: Draft Research Report: (Productivity
Commission, 2009) which again recommended that a national body for the NFP
sector be established.
To date, the Australian government has responded only by saying that they will
consider this recommendation (Commonwealth Government of Australia, 2009). Pro
Bono Australia (2009) expressed the frustration of many in the sector by lambasting the
Government for their inaction, which leaves the Australian Taxation Office to monitor
the sector through the income tax exemption (Arthur Cox & Centre for Voluntary
Action Studies, 2002; Ferguson, 2006).
This lack of government action is of concern considering that the NFP sector in
Australia contributes AUD43 billion to Australia‟s GDP with over 600,000 NFPs
(Productivity Commission, 2009). Given John Key‟s joint announcement with Kevin
Rudd on closer ties to Australia (Ministry of Economic Development, 2009b) New
Zealand will need to pay close attention to progress in this area to consider the impact
for the New Zealand Charities Commission.
2.4.1.1 Regulatory framework
Australia is a federation of states and territories with a resultant division of
constitutional powers between the states and the federal government. Thus the
regulatory environment for charities needs to be considered at both state and federal
level (Arthur Cox & Centre for Voluntary Action Studies, 2002). Whilst at federal level
there is a focus on sector neutrality, at state level New South Wales has introduced
legislation that goes against the nature of sector neutrality. The Associations Incorporate
Act 2009 establishes a scheme for the registration of associations engaged in small-
scale, not-for-profit activities. This Act addresses the issue of small non-profits being
overburdened by introducing a two-tiered financial reporting system that will
distinguish small and large associations on the basis of a financial threshold, which has
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