Removal of duplicative financial reporting for NSW associations

Following on from similar developments reducing the financial reporting burden for Tasmanian, South Australian, ACT and Victorian incorporated associations, in September 2018, the Australian Charities and Not-for-profits Commission (ACNC) recently announced an agreement with NSW Fair Trading whereby NSW incorporated associations registered with the ACNC will, in future, only be required to submit their annual financial reports to the ACNC, which will then share this information with NSW Fair Trading.

This will result in streamlined financial reporting for NSW associations, which will, from 1 October 2018, only be required to lodge financial statements and the annual information statement with the ACNC, and will no longer be required to pay the annual lodgement fee to NSW Fair Trading.

When are the changes effective?

The new reporting arrangements apply from 1 October 2018. This means that any 30 June 2018 financial reports will be lodged with the ACNC rather than NSW Fair Trading.

Can NSW associations lodge financial reports with the ACNC in same format previously provided to NSW Fair Trading?

It depends on what type of financial report was provided to NSW Fair Trading.

The Associations Incorporation Act 2009 requires the preparation of financial statements in accordance with Australian Accounting Standards, which in the Australian context could comprise:

Full general purpose financial statements (GPFS)
General purpose financial statements prepared using the Reduced Disclosure Requirements (RDR), or
Special purpose financial statements (SPFS).

For associations preparing GPFS or RDR, these can simply be lodged with the ACNC from 1 October 2018. However, associations preparing SPFS will need to consider whether these comply with the minimum standards required by section 60.30(2)(a) of the Australian Charities and Not-for-profits Commission Regulation 2013, 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.

If all of the above-mentioned standards have been complied with for SPFS, these financial reports can be submitted to the ACNC. If not, associations will need to ‘step up’ their special purpose financial statements to a format that includes compliance with these standards.

Is there any transitional relief?

The ACNC has established a two-year transition period for NSW associations whose previous financial reports submitted to NSW Fair Trading did not comply with the five minimum standards noted above.

The transitional relief provided by the ACNC for medium and large NSW associations preparing SPFS is included in the table below.

Period	What to lodge with ACNC?
Ending 30 June 2018	Same report that previously met NSW Fair Trading requirements
Ending 30 June 2019	Comply with AASB 101, 107, 108, 1048 and 1054 No comparatives but explain why (refer to ACNC’s example disclosure why comparatives not included)
2020 reporting period and beyond	Comply with AASB 101, 107, 108, 1048 and 1054 Comparatives required

Do we still need to hold an AGM?

The ACNC Act does not require ACNC-registered charities to hold an annual general meeting. However, s37 of the Associations Incorporation Act 2009 still requires NSW incorporated associations to hold an AGM within six months of the end of the reporting period. This aligns with the ACNC requirement to submit financial statements within six months of the end of the reporting period.