Registered Charities - Financial Reports & Audit

Did you know that not every registered charity is required to have its financial report audited?

For registered charities, the audit or review requirement is governed by the ACNC framework and depends primarily on the charity’s annual revenue. The key distinction is between small, medium and large charities. Small charities have annual revenue under $500,000, medium charities have annual revenue of $500,000 or more but less than $3 million, and large charities have annual revenue of $3 million or more.

Small charities are not required by the ACNC to have a financial report reviewed or audited. Medium charities must have their annual financial report either reviewed or audited. Large charities must have their annual financial report audited. Where a review or audit is required, the reviewer’s or auditor’s report must be submitted to the ACNC as part of the charity’s Annual Information Statement.

A review is not the same as an audit. A review provides a lower level of assurance and is generally less detailed than an audit. An audit provides a higher level of assurance and requires the auditor to obtain sufficient appropriate evidence to support their audit opinion. For medium charities, the board should consider whether a review is sufficient or whether an audit is appropriate having regard to the charity’s size, funding arrangements, stakeholder expectations and governance needs.

The practical point is that boards should confirm the charity’s size category early in the reporting cycle and decide whether a review or audit is required before the annual financial report is finalised. This helps ensure that the right professional is appointed, the timetable is realistic, and the reviewer’s or auditor’s report can be lodged with the ACNC on time.

Boards should also check whether any other requirement imposes a higher level of assurance than the ACNC minimum. A charity’s constitution, grant agreement, funding deed, fundraising licence, bank covenant or state and territory legislation may require an audit even where the ACNC would only require a review, or no assurance at all.

Further details are available on the ACNC’s guidance pages, Reviewing and auditing of financial reports and Charity size.