Charities and not-for-profit organisations are required to have their financial records audited for a number of reasons including legislative obligations and common requirements from the Australian Charities and Not-for-Profits Commission (ACNC), ASIC and state regulations.
It’s not just the commercial sector that needs to audit and review their financial reports on an annual basis.
Charities and not-for-profit organisations are required to have their financial records audited for a number of reasons including legislative obligations and common requirements from the Australian Charities and Not-for-Profits Commission (ACNC), ASIC and state regulations.
Requirements for auditing the not-for-profit sector vary and are based on a charity’s annual revenue. For example, if you’re a medium sized charity with an annual revenue of less than $1 million, you are required to submit financial reports that have undergone a review or audit but if you’re a larger charity with an annual revenue of more than $1 million, you need to submit audited financial reports.
In addition, all ACNC registered charities with an annual turnover of more than $250,000 are required to submit their financial reports within six months of the end of the financial year.
However, if your not-for-profit or charity earns less than $250,000 annually, you have less reporting obligations and only need to provide the Annual Information Statement and no other financial statements.
Medium sized charities with less than $1 million in annual revenue, have the option of having their financial records either reviewed or audited, so which one should you choose?
Conducting a review can be a more economical way of assessing your financial records but it only provides a limited evaluation of your financial reports and the level of assurance is minimal.
On the other hand, the benefit of undertaking an audit is that it provides you with a detailed assessment of your financial statements and provides greater insight into your financial position.
In saying that, audits can be time consuming which is why we suggest appointing an auditor to help you with the auditing process. An auditor can assess the financial position of your charity and identify any mistakes or inaccuracies that need to be rectified and work with you to ensure these mistakes are avoided in the future.
In order to decide the best option for you, it’s important to consider your circumstances and seek the advice of professional auditors such as the team at DFK Laurence Varnay.
“The first step we recommend not-for-profit leaders take is to decide which option is best for them based on their circumstances and then suggest they appoint an appropriate auditor or reviewer, ” said Faizal Ajmat, Partner DFK Laurence Varnay.
“It’s also a good idea to start the auditing process early by asking the auditor for a schedule of activity before they start so that you know what they need and when. Undertaking an audit is actually a great opportunity to look at ways of improving your accounting and administrative systems.”
“At DFK we provide advice on how charities and not-for-profits can improve their control environment, risk management and ultimately their performance. If we discover any glitches, we work with clients to develop a plan and help them fix any problems that may arise during the auditing process,” he said.
If you’re looking for help with the auditing of your not-for-profit or charity organisation, feel free to get in touch with our team.
By email, phone, or in-person – our advisors are ready to discuss how we can help take your business to the next level.
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