Overview• The ACNC governance, financial reporting and externalconduct frameworks will start on 1 July 2013• Standards to be developed through consultation untilmid-February 2013• ACNC will release guidance material to assist charities• Regulation impact assessment through COAG – report toCOAG by March 2013
Governance standards - object• The object of the governance standards is to promote theobjects of the ACNC Act by giving the public (including donors,members and volunteers) confidence that charities:– manage their affairs openly, accountably andtransparently;– use their resources (including contributions anddonations) effectively and efficiently;– minimise the risk of mismanagement andmisappropriation; and– pursue their purposes.
Proposed governance standards• Standards will be principles-based and specify the outcomethat charities need to achieve rather than the process• Proposed coverage of standards, subject to consultation:– 1. Purposes and not-for-profit nature of a charity;– 2. Accountability to members;– 3. Compliance with Australian laws;– 4. Responsible management of financial affairs;– 5. Suitability of responsible entities; and– 6. Duties of responsible entities (including ‘protections’)
Proposed transitional arrangementsfor the governance standards• Registered charities will have 18 months totransition to the new governance framework• If the charity needs to change its governingrules, it will have four years to make thesechanges to be in compliance with thegovernance standards
Financial reporting – theframework• Reporting framework is proportional to the size of the charity– Small charity: annual revenue < $250,000– Medium charity: annual revenue between $250,000 and$1 million– Large charity: annual revenue >$1 million• Only medium and large charities will need to provide financialreports to the ACNC– Medium charity: reviewed or audited report– Large charity: audited report• All charities will need to lodge an annual informationstatement, which is also proportional to size
Financial reporting requirements• ‘Reporting entity’ concept– A ‘reporting entity’ must prepare a general purpose financialreport, which applies all relevant accounting standards, or theentity can choose to adopt the reduced disclosure requirements– A ‘non-reporting entity’ prepares a special purpose financialreport, that meet the needs of specific users, and only needs tocomply with a small number of standards• Exceptions to applying the accounting standards• Who can review a medium charity’s financial report?
When does the ACNC reportingstart?• First annual information statement due by 31 December2013 (unless substituted accounting period)• First financial report due by 31 December 2014 (unlesssubstituted accounting period)• Transitional arrangements for reports given to othergovernment agencies
Breaches of the governance andreporting standards• The ACNC will consult on its regulatoryapproach– Emphasis on education and guidance to facilitatecompliance– Enforcement powers only used to address seriousor persistent cases of non-compliance• ACNC Commissioner must consider a range offactors before exercising powers
External conduct standards• Purpose is to regulate funds sent by registeredcharities outside Australia, and activitiesengaged in by these entities outside Australia.• Expected to be released for publicconsultation shortly.