Key questions for directors/CEOs to ask about the financial report

Comments

1

If the charity is a ‘medium registered entity’ has it had a review or audit engagement conducted?

Act: s205-25(2)
Turnover is $250,000 to $999,999

Act: s60-20(1)
Financial statements must either be reviewed or audited

2

If the charity is large, has it been audited?

Act: s205-25(3)
Turnover is $1,000,000 or more

Act: s60-25
Financial statements must be audited

3

Is the charity obliged to submit financial statements to a state or territory-based regulator?

If so, determine exactly what financial information is required (this varies significantly from one regulator to another)

3A

Will the ACNC accept these state or territory-based regulator financial statements?

Refer ACNC web site

4

If no state or territory-based financial statements are required (i.e. financial statements prepared under the ACNC Act 2012), is the charity preparing general purpose or special purpose financial statements?

Regulation: s60.10 – Note 1

Regulation: s60.30(1)

5

If full GPFS - has an explicit and unreserved statement of compliance with IFRS been included?

If so, this is likely to be inappropriate.
It would be unusual for this statement to be appropriate for a charity unless all NFP-specific requirements in Australian Accounting Standards are N/A to the entity

5A

If general purpose financial statements (GPFS) - have reduced disclosures (RDR) been applied?

Most charities are not publicly accountable (Tier 1) under AASB 1053 Application of Tiers of Accounting Standards and can therefore prepare GPFS with reduced disclosures

5B

If RDR financial statements – have all recognition and measurement requirements been applied?

AASB 108, paragraphs 7 - 12

5C

If RDR financial statements – has an explicit and unreserved statement of compliance with RDR been included?

AASB 1054, paragraph RDR 7.1

5D

If RDR financial statements – has the aggregate total of key management personnel compensation been disclosed?

AASB 124, paragraph 17

6

If special purpose financial statements (SPFS) – have all four primary financial statements been included (particularly the cash flow statement and statement of changes in equity)?

Regulation: s60.30(2)

AASB 101 Presentation of Financial Statements, paragraph 10

6A

If special purpose financial statements – have all mandatory standards been identified in note 1, i.e.:

• AASB 101 Presentation of Financial Statements
• AASB 107 Statement of Cash Flows
• AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors
• AASB 1048 Interpretation of Standards
• AASB 1054 Australian Additional Disclosures?

AASB 1054, paragraphs 8(a) and 9

6B

If special purpose financial statements – has additional disclosure regarding non-arm’s length related party transactions been disclosed if necessary to give a ‘true and fair’ view?

Regulation: s60.10 – Note 2

7

Has the appropriate financial reporting framework been identified in note 1, i.e. in accordance with:

• ACNC Act 2012 and ACNC Regulations 2013, or
• [name of state or territory legislation]?

AASB 1054, paragraph 8(a)

8

Does note 1 disclose that the charity is a not-for-profit entity?

AASB 1054, paragraph 8(b)

9

Have all significant estimates and judgements been disclosed?

AASB 101, paragraphs 122 and 125

These requirements are mandatory, regardless of whether GPFS (RDR) or SPFS are prepared

10

Has a directors’ declaration (or other responsible entity’s declaration, as appropriate) been attached, stating whether in your opinion:

• 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
• The financial statements and related notes satisfy the requirements of the Act.

Regulation: s60.15

11

Has a review report or audit report (as applicable) been attached?

Refer questions 1 and 2 above

12

Has the annual information statement been prepared to accompany the financial statements?

Act: s60-5
The annual information statement and the financial report must be lodged with the ACNC within 6 months of the end of the financial year