Not for Profit News Spring Edition

Welcome to the Spring Edition of NFP News.

The year is rapidly passing us by and with the warmer weather approaching many of you with June balance dates will have just concluded your statutory reporting and audit season and be preparing for your annual general meetings. Having attended many AGMs in the not-for-profit sector over the years I know they can be a great opportunity to show the local community the great work and services that you provide and I wish you every success with these.

In this edition of NFP News we have a number of highly topical articles. A new publication  “Australia’s Aged Care Charities in 2015” outlines the important role that the aged care charities play in the community and there are some very interesting findings reported. Information on the streamlined 2017 Annual Information Statement is provided, along with the ACNC’s latest red tape reductions in relation to duplicate reporting obligations. From an accounting standard perspective we take a look at the new AASB 1058 “Income of Not-For-Profit Entities” and an excellent table on Fraud tools and tips is provided along with access to more detailed information in this area.

I hope that you find the articles produced in this edition of NFP News helpful to you and your organisation. As always if you would like to discuss any aspect of the newsletter or any auditing or accounting related matters, please feel free to contact any of the NFP team at William Buck.


Terrorism financing risk is 'medium'

A new report that analysed more than a quarter of a million NFPs that send funds – or operate – overseas has classified as ‘medium’ the risk of money-laundering and terrorism financing.

Produced in partnership with the Commonwealth’s financial-intelligence agency AUSTRAC, Australia’s non-profit organisation sector: money laundering and terrorism financing risk assessment is the first survey of its kind in Australia.

The risk assessment measured vulnerabilities that could be exploited for criminal activity or to promote and support terrorism.

The survey was released by assistant minister to the treasurer Michael Sukkar, justice minister Michael Keenan, ACNC commissioner Susan Pascoe, and AUSTRAC deputy CEO Gavin McCairns.

About 54,000 of the NFPs surveyed fell under the jurisdiction of the ACNC as registered charities.

Key intelligence and data for the assessment was sourced from 23 agencies, including Commonwealth, state and territory law-enforcement bodies, and non-profit regulators, including the ACNC, academic research, and from the sector itself through a national survey and a series of roundtables.

The report highlighted factors that increased an NFP’s money-laundering and terrorism-financing risk, which will help the ACNC target its compliance and education policies.

Charities sending funds and operating overseas should take the time to read the report to ensure that they understand the risks.  In fact, understanding risks associated with sending funds abroad was highlighted as one of the best ways to protect a charity against the threats surveyed.

ACNC commissioner Susan Pascoe said: ‘Charities are crucial in getting funds into conflict zones and other unstable regions, and this is not without heightened risk.’

‘All charities, whether they operate domestically or internationally, must understand money-laundering and terrorism-financing risks and ensure they have robust risk-based governance practices to prevent criminal misuse.’

Acting AUSTRAC CEO Peter Clark said it was vital that government, industry and the NFP sector continued working together to keep the sector safe from criminal abuse and terrorism financing.  ‘This risk assessment will assist our reporting entities who deal with NPOs to assess their level of vulnerability, strengthen their controls, and report suspicious activity to AUSTRAC,’ said Mr Clark.

The report shows that Australian NFPs can better manage money-laundering and terrorism-financing risks by understanding them and having strong governance and internal controls and good accountability.

The assessment also identified common characteristics of NFPs at higher risk of being misused for terrorism financing.

Australia’s non-profit organisation sector: money laundering and terrorism financing risk assessment can be found on the AUSTRAC and ACNC websites.

Download your copy of the report at

Governance Institute discloses executive pay

The Governance Institute of Australia has decided to give more details about the remuneration of its chief executive and directors.

The pay of a dozen key management personnel last year totalled $2,144,561 – $1,773,089 in salaries and bonuses, $165,704 in superannuation contributions, and $205,768 in long-service leave.

The institute’s president and board members are unpaid directors.

While NFPs are not required by law or regulation to provide this level of disclosure, the institute said that it had voluntarily provided more details consistent with many listed companies and the Australian Securities Exchange’s guidelines and recommendations.

In recent months, other associations and professional bodies that had disclosed executive remuneration only on an aggregate basis, including the Tax Institute, Chartered Accountants Australia and New Zealand, CPA Australia, the Australian Institute of Company Directors and the Institute of Public Accountants, had also decided to disclose chief executives’ salaries and bonuses.

The institute’s chief executive Steven Burrell said that the new disclosures provided greater transparency to members.

For the financial year ended 31 December, Mr Burrell received a base salary of $280,000 inclusive of superannuation plus a performance bonus of $10,237.50.

In 2017 Mr Burrell will receive a base salary of $284,200 inclusive of superannuation. Any performance bonus will be determined by the board in March after financial results for the 2017 fiscal year are finalised.

Aged care charities profiled

Australia’s aged-care charities employ more than 170,000 people, according to a report released by the Australian Charities and Not-for-profits Commission.

Australia’s Aged Care Charities in 2015 was produced by the ACNC in collaboration with the Centre for Social Impact and the Social Policy Research Centre at the University of New South Wales.

It forms part of the umbrella Australian Charities Report, an annual analysis of data reported by charities in annual information statements.

The report profiled 1465 registered charities that listed their main activity as aged-care services.

Some findings were:

  • Australia’s aged-care industry supports over 1.3 million older people and is growing rapidly
  • While many aged-care charities focus on the delivery of residential aged care and home care, some undertake a much wider range of activities, including providing cultural and recreational opportunities, social services and religious services
  • Aged-care charities tend to be larger than most, with combined income of more than $12.5 billion
  • Aged-care charities benefit from more than $160m in donations and bequests each year, and
  • 93 per cent of them reported that they had volunteers.

CEO of Aged & Community Services Australia Pat Sparrow said that the report highlighted the important role aged-care charities played, both socially and economically.

‘This report identifies the multiple ways [in which] aged-care charities make an economic and social contribution many times their relative size,’ Ms Sparrow said.

‘For instance, although aged care charities make up just 2.9 per cent of all registered charities, they account for 9.3 per cent of the charity sector’s total income.  They also constitute 14.1 per cent of all the charity sector’s employees.

‘Importantly, not-for-profit organisations provide great care to thousands of older Australians, while also providing employment opportunities for more than 170,000 people.

‘Any research which paints the picture of the contribution that not-for-profit aged-care providers make to Australian society and the economy is welcomed by our organisation.’

Australia’s Aged Care Charities and the Australian Charities Report 2015 are available to download at

Charitable investment fundraisers might need a licence

The Australian Securities and Investments Commission has notified the ACNC of new obligations for charitable-investment fundraisers.

From 1 January, charities that issue financial products might also need an Australian Financial Services licence.

Licence applications can take about three months, and ASIC recommends that affected charities apply as soon as possible.

Charitable-investment fundraisers can find more information and further guidance on charitable schemes on the ASIC website.


2017 Annual Information Statement released

New guidance material and an enhanced online form are among key improvements to the ACNC’s 2017 annual information statement.

The statement – at a new website hub –creates a one-stop shop at which charities may report.

It contains a comprehensive range of support and guidance materials and aims to make it easier for charities to fulfil their reporting requirements and provide accurate, high-quality and timely information through their statements.

Improvements to guidance materials include:

  • A complete re-design of the AIS guide, the 2017 document broken up into shorter sections
  • New menus that help charities navigate more easily around the online document
  • Expanded help containing almost 50 direct links to relevant sections of the guide, enhancing charities’ ability to cross-reference relevant guidance material – and minimise errors
  • Updates to the AIS checklist, providing a reference point for the information and documents charities need to have handy before they start their statement, and
  • A tip sheet outlining some of the common mistakes charities make when filling in their statements and how to avoid them.

Further additions to the hub are planned, including links to a fully updated suite of reporting guidance and instructive how-to videos aimed at helping charities complete or learn more about specific sections of the statement.

Key improvements to the AIS include:

  • Easier-to-understand questions, especially those related to charity finances, activities and beneficiaries
  • Improved auto-filling and auto-calculation of responses to certain questions, allowing charities to quickly progress through sections of the statement
  • The ability for charities to view and update their responsible persons, ensuring that their organisations’ details are up to date
  • A new preview function, allowing charities to check their responses before submission, and
  • An improved layout, including a more prominent ‘Submit’ button to ensure charities don’t forget to submit their statement.

ACNC commissioner Susan Pascoe said: ‘Completing and submitting [a statement] is a major part of registered charities’ ongoing obligation to report annually.

‘In addition, the information gathered through [statements] helps us cut red tape and […] contribute to a greater understanding of the sector.

‘We see the hub as a landing place [where charities] can easily access the information and guidance they need.’

The first charities to complete their 2017 statements will follow a standard financial year – 1 July to 30 June.  The ACNC encourages early submission.

Charities can visit the hub or start work on their statements at

Red tape reductions

In the effort to continue to streamline reporting for registered charities, ACNC commissioner Susan Pascoe has exercised her discretion to accept annual financial reports lodged with some state and territory regulators for the 2017 financial year.

The move will save registered charities that are facing duplicate reporting obligations significant time and resources.

Ms Pascoe has extended by a month to 31 January the due date for submission of statements for charities using a standard reporting period.

For charitable ancillary funds with a reporting period ending 30 June, the due date for statements has been extended to 28 February.

For ancillary funds with an approved substituted-accounting period, the 2017 AIS due date has been extended to the 15th day of the seventh month after the close of the period.

If your ancillary fund’s approved substituted-accounting period is 1 January to 31 December, then the 2017 AIS would be due on 15 July.

From next year, the due date for statements from charitable ancillary funds will be six months from the end of the reporting period.

You may withhold information

Registered charities can apply to the ACNC to have information withheld from the register.

When charities apply to have information withheld, the ACNC removes them from the register while the request is reviewed.

The ACNC determines is information may be withheld based on requirements in its Act.  Information may be withheld that:

  • Is commercially sensitive and publication could cause harm to the charity or a person
  • Is inaccurate or misleading
  • Is likely to offend
  • Could endanger public safety, and
  • Is covered by ACNC regulations.

If the request does not meet these requirements, the commission will notify the charity and the information is again made public on the register.

A policy statement on withholding information states that publication of information on the register is generally in the public interest as transparency and accountability contribute to public trust and confidence in charities.  The commission’s starting point is that publication is in the public interest with very few exceptions.

To find more information about withholding information, visit 

Grad Connect launched

To streamline and centralise government grants, the federal government has developed GrantConnect, a whole-of-government grants-information system.

Government grant-funding is spread across many programs and departments and until recently to apply for the right grant was challenging.

GrantConnect is free to use and links individuals and organisations to relevant opportunities.

You can find more information about GrantConnect at

Double defaulters risk losing status

Almost 200 charities are at risk of losing their ACNC registration for twice failing to submit their annual information statements.

The charities failed to submit statements for 2014 or 2015 and are overdue this year.

Many are small religious organisations and parents’ and citizens’ associations.  They risk losing access to generous Commonwealth tax concessions.

‘Each year registered charities are required to submit [statement],’ commissioner Pascoe said.  ‘This is one of the ongoing obligations charities must meet to maintain their registration […], which is a prerequisite to obtaining […] tax concessions.  Failing to submit two [statements] is grounds for revocation of charity status.

‘Not only is it a legislative requirement to submit an [annual statement], it is also a way for registered charities to demonstrate their commitment to transparency and accountability.’

The ACNC has published a list of charities at risk of losing registrations at

Charities lose status and tax concessions

The ACNC, has revoked the charity status of the African Australian Network Limited, Global Helping Hands Foundation – Australia, and the Immigrant Womens’ Health Information Service Inc following investigations into their activities and operations.

Based in Victoria, the African Australian Network Limited has been operating since September 2013.  The decision to revoke its charity status, which was announced on 17 July, was backdated to 19 May.

Global Helping Hands Foundation – Australia has been operating since November 2007 and is based in Victoria.  The decision to revoke its status, which was announced on 17 July, was backdated to 5 May.

The Immigrant Womens’ Health Information Service Inc has been operating since July 2000 and is based in New South Wales.  The decision to revoke status announced on 19 July, was backdated to 20 June.

The ACNC is prevented from disclosing further details due to secrecy provisions in the ACNC Act. However, the commission publishes revocations on the register.

The charities were endorsed by the ATO to receive tax concessions.

The charity status of Survivor Foundation Incorporated has been revoked – backdated to 17 July – following an investigation into the organisation’s operations and activities. The organisation, based in Perth, accessed tax concessions.

Following referral by the ACNC to the ATO, all four organisations will lose access to Commonwealth charity tax concessions, including access to tax-deductible gifts.

Ms Pascoe said that the ACNC was committed to protecting public trust and confidence in Australia’s charity sector.

‘We are continuously working with the public, the sector and other government agencies to identify and investigate charities that breach the ACNC Act,’ she said.

‘When investigating compliance issues, the ACNC has a range of regulatory powers at its disposal, including guidance and support, warnings, directions and enforceable undertakings.

‘Where we find serious circumstances of mismanagement, or deliberate breaches of the ACNC Act […] we will revoke charity status.’

For more information about the ACNC’s compliance activity, including the full list of charities that have had their registrations revoked following compliance investigations, visit

Financial reporting

A look at AASB 1058 Income of NFP Entities

AASB 1058 Income of Not-For-Profit Entities and AASB 15 Revenue from Contracts with Customers and its NFP appendix specify the income-recognition requirements that apply to NFPs.

Both standards apply to annual reporting periods beginning on or after 1 January 2019.

They supersede income-recognition requirements of private-sector NFPs and most of the counterpart requirements of public-sector NFPs that were in AASB 1004 Contributions.

The timing of income recognition depends on whether such a transaction gives rise to a liability or other performance obligation (a promise to transfer a good or service) or a contribution by owners related to an asset (such as cash or another asset) received by an entity.

AASB 1058 applies when an NFP gets volunteer services or enters into other transactions where the consideration to acquire an asset is significantly less than the fair value of the asset principally to enable the entity to further its objectives. In the latter case, the entity recognises and measures the asset at fair value in accordance with the applicable Australian standard (for instance, AASB 116 Property, Plant and Equipment).

When an asset is recognised, the standard requires the entity to consider whether any other financial statement elements (called ‘related amounts’) should be recognised, such as (a) contributions by owners, (b) revenue, or a contract liability arising from a contract with a customer, (c) a lease liability, (d) a financial instrument, or (e) a provision. Related amounts are accounted for in accordance with the applicable Australian standard.

If the transaction is a transfer of a financial asset to enable an entity to acquire or construct a recognisable non-financial asset to be controlled by the entity (that is, an in-substance acquisition of a non-financial asset), the entity recognises a liability for the excess of the fair value of the transfer over any related amounts recognised.

The entity recognises income as it satisfies its obligations under the transfer similarly to income recognition of performance obligations under AASB 15.

If the transaction does not enable an entity to acquire or construct a recognisable non-financial asset to be controlled by the entity, then any excess of the initial carrying amount of the recognised asset over the related amounts is recognised as income.

When an entity receives volunteer services and can reliably measure the fair value of those services, the entity may elect to recognise the services as an asset (provided the relevant asset-recognition criteria are met) or an expense.

Fraud and NOCLAR

Fraud tools and tips

The ACNC has provided advice on fraud prevention and good governance for charities in Protect your charity from fraud and Governance for Good

The top 10 tips from Protect your charity from fraud (adapted) are:

Tip How to 
Clear, written financial procedures, delegations and limits Have financial controls that staff and volunteers follow. For example:

  • Have two cheque signatories (and do not sign cheques in advance)
  • Have two people involved in handling and recording money received, and
  • Set clear financial delegations limiting authority to approve purchases and other transactions to set amounts.
Robust human-resources procedures Ensure recruitment processes are sound, and provide training and communication to staff and volunteers about fraud-prevention measures, including financial controls and how to report suspicions.
Code of conduct Demonstrate and encourage ethical behaviour.  Display prominently your code of conduct.
Financial responsibility Ensure those with financial responsibility are competent and understand their role and responsibilities.

Have written role descriptions setting out expectations of staff, including their financial responsibilities.

Fraud-prevention policy Have a fraud-control policy setting out who must do what to prevent, identify and respond to fraud

Consider use of fraud/non-compliance with rules and regulations (NOCLAR) whistleblowing reporting mechanism as a preventive and detection control.

Internet banking security Ensure your accounts and online banking passwords are secure and limit who can have access to them.  Regularly change your passwords.
Limit cash handling Large amounts of cash can encourage theft and fraud, so limit the amount to be handled by your staff and volunteers.  Bank promptly.
Regularly check your accounts and any grant funding Review your accounts regularly and identify anything that does not make sense.

Keep a record of all grant applications and how the grant funds were used.

Monitor performance against its budget, and if you see a significant variation in spending or income, ask for more information.

Ask questions Members of your board or management committee should feel comfortable to ask questions about the financial information they receive before each board or committee meeting.

Make people accountable and do not take anything for granted.

Understand the importance of reporting fraud Make sure your staff and volunteers understand the importance of reporting fraud to senior management and that a clear process is in place to report concerns to the police and the ACNC as soon as possible.

This will help to protect your charity from fraud and enable the ACNC to work with you to take appropriate steps to protect better your charity


While these tips are written for charities, the principles have application to all not-for-profit entities.

The ACNC has reminded members of a charity’s governing body such as board and committee members, trustees and directors – what the ACNC calls ‘responsible persons’ – that they have legal duties towards the charity.

They must act in the charity’s best interests to avoid conflicts of interest and to act with reasonable care and diligence.  They should act in a way that protects the charity’s assets and ensures that the charity’s financial affairs are managed in a responsible manner and for its charitable purpose.  This helps protect against fraud.

Their role includes:

  • Making sure that everyone involved in the charity (including trustees, board and committee members, and staff and volunteers) is aware of the risk of fraud and what it can mean for the charity
  • Using proper financial controls and procedures suited to the size and nature of the charity, and
  • Acting responsibly and in the interests of the charity, if a charity becomes the victim of fraud or other financial crime.  This includes notifying the police and the ACNC and taking appropriate steps to manage the consequences of the fraud.

For information about scams and general advice, visit the Australian Competition and Consumer Commission’s SCAMwatch website.


Charity red tape reduction progresses in Victoria

The ACNC continues to engage in productive discussions with officials across Commonwealth and state and territory governments to reduce red tape for registered charities.

Consumer Affairs Victoria has committed to exempt Victorian ACNC-registered associations from state reporting by the end of the year, streamlining for fundraisers to follow soon after.

The announcement follows the Victorian government’s passing the Consumer Acts Amendment Act in May, which will allow ministers to exempt certain ACNC charities from reporting direct to Consumer Affairs Victoria.

You can read more about the ACNC’s efforts at streamlining reporting at

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