Audit of Not-For-Profit Organisations
Most Not-for-Profit Entities are registered with the ACNC, which then, in addition to the rules of each entity, prescribes the audit requirements for the entities.
An association may still require an audit to be carried out and this requisite would normally be specified in the rules. It is within the power of the members to pass a resolution that the accounts for a particular financial year be audited, especially if they had any reason to be concerned. Funding body agreements might also require the association’s accounts to be audited to ensure that the funds provided are used according to the funding agreement and for the purpose stated in the agreement.
The ACNC audit requirement is based on the turnover of each entity and it’s classification as small, medium or large.
Tier 1: less than $250,000 in revenue
A Tier 1 association is not required to complete an audit or review of its accounts unless:
- it is a requirement of the association’s rules that one be completed;
- it is a requirement under the terms of the association’s funding agreement or licence;
- the majority of members at a general meeting pass a resolution that an audit will be completed; or
- the association is directed to do so by the Commissioner.
Tier 2: $250,000 to $1,000,000 in revenue
All Tier 2 associations must have their financial reports reviewed. The process of reviewing an association’s accounts is not as detailed as the process of completing an audit. A reviewer will look over the association’s financial report and provide a statement whether anything has come to their attention which might suggest that the association’s report does not comply with the requirements of the Act. In comparison, an auditor must collect evidence relating to the association’s financial records and transactions to satisfy themselves that the report is a true and correct reflection of the association’s finances. This enables them to provide a formal opinion whether the accounts meet the relevant legal requirements.
Tier 3: over $1,000,000 in revenue
The Act requires all Tier 3 associations to ensure that their annual financial report is audited and a copy of the audit report is presented to the members at each annual general meeting.
If you have any queries in relation to our audit services contact us today on (03) 9431 3000.