ACNC audit requirements

The Australian Charities and Not-for-profits Commission (ACNC) is the national regulator of charities in Australia. The ACNC has specific audit requirements that not-for-profit (NFP) organisations must comply with, designed to ensure transparency, accountability, and good governance within the NFP sector. 

Key Points:

• The ACNC has specific audit requirements for not-for-profit organisations in Australia.·       NFPs with annual revenue over $1 million must submit audited financial reports.
• Medium NFPs with annual revenue between $250,000 and $1 million can choose to submit either audited or reviewed financial reports.
• Small NFPs with annual revenue under $250,000 are not required to submit audited or reviewed financial reports unless specifically requested by the ACNC.
  

Understanding and Meeting ACNC Audit Compliance

The ACNC is part of the regulatory framework for the charitable sector across Australia. As the national regulator, one of the ACNC’s primary responsibilities is to promote transparency and accountability among not-for-profit organisations. To achieve this, the ACNC has established specific audit requirements that charities must comply with depending on their size and operations. These audit obligations are designed to provide assurance to donors, governments, and the general public that charity funds are being managed responsibly and used for their intended purposes. Audits also assess compliance with the ACNC’s governance standards, which cover critical areas like financial reporting, responsible management, and adherence to an organisation’s charitable purpose. By demonstrating transparency through the audit process, charities can help build and maintain community trust - which is essential to attract volunteers, donors, and support over the long-term.

What are the ACNC Audit Requirements? 

The ACNC categorises charities into three tiers based on annual revenue: small (under $250,000), medium ($250,000-$1 million) and large (over $1 million). This determines the level of audit required in each case. Large charities must submit independently audited financial reports annually, prepared by a qualified auditor in accordance with Australian auditing standards. Medium charities can opt for either a full audit or a limited assurance review. Small charities are not obligated to undergo auditing but must maintain proper financial records. 

The specific processes and standards set out by the ACNC aim to ensure consistency and rigour across the charitable sector. For large charities, the audit provides reasonable assurance that financial statements present a true and fair view. Reviews of medium charities offer limited assurance that nothing material is misstated. While small charities have fewer formal obligations, proper record-keeping still facilitates accountability and transparency at any scale.

Promoting Good Governance Through Auditing

There are important governance reasons for auditing beyond simply validating financial figures. The process provides independent scrutiny of a charity’s internal controls and risk management systems. It also assesses compliance with the ACNC’s governance standards which address leadership, planning, monitoring, reporting, and decision making within an organisation. By subjecting itself to this level of inspection, a charitable board demonstrates its commitment to best practice, responsible stewardship and achieving intended outcomes for stakeholders. 

Audit findings may highlight potential issues, inefficiencies, or areas for improvement. Addressing these in a timely fashion is part of high-quality governance. It shows that a charity is committed to ongoing self-evaluation and using feedback to strengthen performance. Boards that treat auditing as a technicality risk reputational damage, whereas those which embrace it as an opportunity gain valuable guidance. A culture of review and reflection fosters transparency that builds communities of trust around a nonprofit’s work.

Building Trust Through Demonstrated Compliance   

By meeting ACNC audit obligations, charities substantiate their claims of financial prudence and responsible management. This is critical to attracting donor support which sustains much of the sector. Individuals and organisations wish to see that their contributions are well-governed before parting with funds. Submission of independently verified reports as required by regulation is a basic step to prove stewardship standards are being upheld. 

Charities which fail to comply with audit duties risk eroding confidence in their operations and governance. This makes it increasingly difficult to raise awareness and money for important causes over time. While the ACNC provides leniency, repeated non-compliance could eventually lead to penalties, loss of registration and detrimental flow-on effects. To avoid such scenarios, charities of all sizes would be wise to understand their obligations, plan auditing proactively and take findings in the constructive spirit they are intended. 

In a competitive environment, demonstrating accountability through transparent auditing sets charities apart. It provides reassurance that they are trustworthy stewards of community resources. With care, charities can view compliance not as a burdensome task but a valuable exercise in strengthened governance, management insights and sustained public goodwill. Ultimately, responsible financial practices and a willingness to openly substantiate them builds a virtuous cycle of community participation and support for charitable mission.