Large charities to disclose key management personnel (KMP) compensation

All charities preparing either Tier 1 or Tier 2 (Simplified Disclosures) general purpose financial statements (GPFS) for the Australian Charities and Not-for-profits Commission (ACNC) must automatically include disclosure regarding compensation paid to key management personnel (KMP). However, before 2022, those preparing special purpose financial statements (SPFS) had no such requirement.

For years ending on or after 30 June 2022, the Australian Charities and Not-for-profits Commission Regulations 2022 requires large charities with two or more KMPs to disclose KMP compensation. While charities preparing GPFS would automatically comply with this requirement (including providing comparative information), those preparing SPFS must now disclose KMP compensation if they have two or more KMPs. As 30 June 2023 is the second year for the required disclosures, comparatives must be provided for the year ending 30 June 2022.

What is a large charity?

The thresholds for ACNC reporting increased for 30 June 2022 and subsequent years as follows:

Size of charity

Old revenue threshold

New revenue thresholds for 30 June 2022 and later years

Audit/review requirement

Small

Less than $250,000

Less than $500,000

None

Medium

$250,000 to $1 million

$500,000 to $3 million

Review or audit

Large

Greater than $1 million

Greater than $3 million

Audit

Only charities whose revenue exceeds $3 million for the year must provide the KMP compensation disclosures in their SPFS. Medium-sized charities do not have to disclose KMP compensation if they prepare SPFS.

What if a large charity only has one KMP?

Large charities may have privacy concerns if they are required to disclose KMP compensation and they only have one KMP. The Australian Charities and Not-for-profits Commission Regulations 2022 therefore provides an exemption to large charities from disclosing KMP compensation if their key management personnel comprise only one individual (Regulation 60.30(4)(b)).

Example 1

Large Charity has one KMP – the CEO.

For the year ended 30 June 2022, John Smith was the CEO and for the year ended 30 June 2023, Sarah Black was the CEO.

Large Charity’s key management personnel therefore consisted of only one individual for both the 30 June 2022 and 30 June 2023 financial years, so KMP compensation is not required to be disclosed for either period.

What if the large charity has one KMP position occupied by more than one individual during the year?

As noted above for Example 1, the Regulation 60.30(4)(b) exemption only applies if the large charity’s key management personnel consists of only one individual.

Example 2

Large Charity has one KMP – the CEO.

For the year ended 30 June 2022, John Smith was the CEO. He resigned on 31 December 2022.  Sarah Black was appointed CEO from 1 January 2023.

As Large Charity had more than one KMP during the 30 June 2023 financial year, the exemption contained in Regulation 60.30(4)(b) does not apply and KMP compensation must be disclosed for the 30 June 2023 financial year as follows:

  • CEO compensation for John Smith from 1 July 2022 to 31 December 2022
  • CEO compensation for Sarah Black from 1 January 2023 to 30 June 2023.

Comparatives are not required because in the previous period Large Charity’s key management personnel comprised of only one individual (John Smith).

Example 2 illustrates a fact pattern where two individual KMPs are not serving concurrently, and the exemption in Regulation 60.30(4)(b) does not apply because two individuals occupied the position of KMP during the period. If two individuals were to serve concurrently during a handover period, there would similarly be no exemption for KMP compensation disclosure because two different individuals have been KMPs during the period.

What if the large charity has two KMPs but one leaves during the year?

Again, the exemption does not apply because two different individuals have been KMPs at some point during the period.  

Example 3

For the 30 June 2022 year-end, Large Charity had two paid KMPs – the CEO and the CFO.

The CEO continued in their role from 1 July 2022 but resigned on 31 December 2022 and the CFO was the sole KMP for the remainder of the 30 June 2023 financial year.

As Large Charity had more than one KMP during the financial year, the exemption contained in Regulation 60.30(4)(b) does not apply and KMP compensation must be disclosed for the 30 June 2023 financial year as follows:

  • CEO compensation from 1 July 2022 to 31 December 2022
  • CFO compensation from 1 July 2022 to 30 June 2023.

Comparatives must be provided for the CEO and the CFO for the whole of the 30 June 2022 financial year.

No exemption for GPFS

All charities preparing GPFS, regardless of whether Tier 1, Tier 2, medium or large, must disclose KMP compensation, including comparatives.

Regulation 60.30(4)(b) only exempts large charities preparing SPFS from disclosing KMP compensation if their key management personnel comprises only one individual.

Reminder - All charities to disclose other related party information for the first time in 30 June 2023 SPFS

Charities preparing SPFS for the ACNC will also need to disclose other related party information in their 30 June 2023 SPFS for the first time. Comparatives are not required for these first-time disclosures because the ACNC Commissioner has exercised its discretion to provide relief.

Other related party information can either be provided in accordance with:

  • AASB 124 Related Party Disclosures, or
  • The equivalent disclosures in AASB 1060 General Purpose Financial Statements—Simplified Disclosures for For-Profit and Not-for-Profit Tier 2 Entities as permitted by Regulation 60.30(3).

Refer to our previous article for more information.

Need help?

Please contact our IFRS & Corporate Reporting team if you require assistance with your KMP disclosures for charities.