Australian Charities & Not-for-profits Commission

Presentation – CFECFW - Melbourne 8 March 2013

Presented byJon Reid, Director, Reporting and Red Tape Reduction

Overview of Topics

• Introduction to the ACNC• Key activities of the ACNC• Obligations of charities to the ACNC• ACNC Reporting Framework• Reduction Initiatives• Education and compliance• Comments and questions

What is the Australian Charities and Not-for-profits Commission?The ACNC is the independent national regulator of charities.

• Established on 3 December 2012

• 56,608 registered charities.

The ACNC: • registers organisations as charities

• helps charities understand and meet their obligations through information, guidance, advice and other support

• maintains the ACNC Register

• works with governments and government agencies across jurisdictions to develop a simplified reporting framework.

ACNC object 1: Maintain, protect and enhance public trust and confidence in the Australian not-for-profit sector.

ACNC object 2: Support and sustain a robust, vibrant, independent and innovative Australian not-for-profit sector.

ACNC object 3:Promote the reduction of unnecessary regulatory obligations on the sector.

ACNC object 3.Promote the reduction of unnecessary

regulatory obligations on the sector.• ACNC Reporting and Red Tape Reduction Directorate

• ACNC Chair Reducing Regulatory NFP Duplication Working Party with the DPC

• Data Standardisation – adoption of the National Standard Chart of Accounts (NSCOA) and alignment with Standard Business Reporting (SBR)

• Charity Passport – progressively implemented from July 2014 - ACNC collect data from registration and AIS and

provide to authorised Comm’th agencies = key element of report-once, use often.

The ACNC Register

• free, online, public register of ACNC registered charities at acnc.gov.au.

Initial information on the ACNC Register includes the charity’s:• legal name• Australian Business Number (ABN), which links to their record on ABN Lookup. This record includes basic information such as the types of tax concessions your organisation receives and whether it has the deductible gift recipient (DGR) status• state or territory of registration.

– continued…

The ACNC Register

In future, the ACNC Register will also list:• business address and contact details • the type of charity it is registered as • registration date • responsible person details (including names and positions) • a copy of the governing rules • the annual information statements provided to the ACNC,

including financial reports and audit reports if the charity is medium or large and therefore required to provide these

• enforcement action taken by the ACNC (such as warnings, directions, or removal of director)

ACNC Mailout

Staged mailout to 56,000 charities previously

registered with the ATO• Commencing 29 January 2013• Form to capture information from you in one interaction• The form is also available online as a fillable pdf• Information we receive will help us update the ACNC

Register• Please call us if you do not receive the letter by

mid-March 2013

Obligations to the ACNC

Obligations vary depending on the charity’s size• Small charities do not need to provide as much

information as medium or large charities.

A charities size is determined by its annual revenue• small – annual revenue less than $250 000 • medium  – annual revenue between $250 000

and $1 million• large – annual revenue is $1 million or more.

Obligations to the ACNC continued

To maintain ACNC registration, all registered charities need to:

• notify us of certain changes, such as:

– service address, legal name, governing body members, governing rules

• keep records

– financial records, operational records

• report to us each year

• meet governance and external conduct standards from 1 July 2013.

• Some exemptions for basic religious charities and non-government schools.

Timeline for reporting

3 Dec 2012 July 2014March 2013

ACNC Act received royal assent and ACNC

commences operation as Australian charities

regulator

Financial reporting; governance standards and external conduct standards Regulations expected

to come into effect under the ACNC Act

Registered charities have 6 months from July 2013 to

submit a basic annual information statement (non-financial information) to the

ACNC

July 2013 October 2013 January 2014 March 2014

New statutory definition of a charity

expected to be introduced into

Commonwealth law

First financial reporting year

Registered charities have 6 months from July 2014

to provide first full annual information

statement (including financial report) to the

ACNC

Transitional Annual Information Statement (TAIS) 2012-2013• All registered charities have to submit an AIS • Legislative requirements:

– Recognised Assessment Activity– Objects of the ACNC Act:

• The AIS will be brief and it will cover information that charities already know, such as:– how the charity works towards its charitable purpose– the number of volunteers and paid staff– the type of people who benefit from the charity

• We will pre-populate the AIS and first AIS due six months after the 2012–13 reporting period

• There are penalties for not filing the TAIS or for deliberately providing misleading information

2013-2014 AIS

• Due for lodgement by 31 December 2014 (unless a SAP applicable)

• Will include financial and non-financial information – Proportional to charity size

• Aligned to National Standard Chart of Accounts (NSCOA) and Standard Business Reporting (SBR)

• Consultation with government and the sector to be undertaken

Proposed standards for financial reports

• Reporting framework is proportional– Small charities/BRCs are exempt from financial

reports– Medium charities must prepare a financial report

which can be reviewed rather than audited– Large charities must prepare an audited financial

report

• Medium and large entities will generally need to apply accounting standards

Transitional arrangements

• Commissioner may accept statements and financial reports lodged with other Government agencies as meeting the reporting requirements of an AIS or an annual financial report (subject to conditions)

• Financial reports given under the Schools Assistance Act 2008 must be treated by the ACNC as an annual financial report (AIS still required unless above general transition applies)

Progress in red tape reduction

• Streamlined Reporting Working Groups across C’wlth (eg DEEWR, ISCA, ACARA, NCEC for non-govt schools)

• Commonwealth Grant Guidelines have been amended to improve and simplify interactions around grants between the Government and the sector

• Working with other regulators (eg ASIC and ORIC) to remove or minimise duplication

• Collaborating with State and Territory government agencies to minimise duplicated regulatory obligations wherever possible (eg SA)

• Annual Report to Parliament to map progress in achieving meaningful red-tape reduction for charities.

NSCOA & SBR

• QUT developed NSCOA in 2002• COAG agreed to an implementation plan for

adoption of NSCOA for NFPs by July 2010 where possible

• SBR Involves Commonwealth/State/Territory governments, software developers and service providers (accountants/book keepers)*• “Common reporting language based on

international standards and best practice”

• Aimed at “removing unnecessary and duplicated information from government forms”

*Source: www.sbr.gov.au

Proposed governance standards

• Standards will be principles-based and specify the outcome that charities need to achieve rather than the process

• Proposed standards:– 1. Purposes and not-for-profit nature of a charity;– 2. Accountability to members;– 3. Compliance with Australian laws;– 4. Responsible management of financial affairs;– 5. Suitability of responsible entities; and– 6. Duties of responsible entities (including

‘protections’)

Compliance - When and how we will act

• Act based on risks and evidence• Begin by assuming honesty• Use least coercive powers to address concerns

Options include:• advice, education, support• no-action letters• referrals – collaborating with other regulators• administrative penalties• warnings• directions• enforceable undertakings• injunctions• suspension/removal• revocation

Regulatory pyramid of compliance and support

Examples: Misuse of charity for serious criminal purposes (including financing terrorist activities) or significant private benefit

Examples: Entry into financial transactions that risk insolvency; Involvement in illegal activity; Private benefit obtained by a board member.

Examples: Evidence of excess financial benefit to owners; evidence of tax evasion.

Examples: Repeated failure to lodge documents on time; innocent mistake as to how many board members are needed to make a decision.

Examples: Forgetting to lodge a statement or report; making a minor mistake in a financial report; common mistakes or misunderstandings.

Factors to consider

• Type of problem

• What/who at risk

• Likelihood and frequency

• Potential impact

• Risk profile

• Behaviour of those responsible

What other factors should we consider?

What do you see as the key risks to public trust and

confidence that we should focus on?

Finding out more: www.acnc.gov.au

Providing you with access to information is a priority for us

• Weekly Commissioner Column (sent to 6,193 subscribers)

• Media alerts and releases and newsflashes

• Aboriginal Liaison officers

• podcasts and videos – coming soon

• Phone: 13 ACNC (13 22 62) 8 am to 8 pm AEDST

• Email: advice@acnc.gov.au

• Social media: facebook.com/acnc.gov.au

twitter.com/acnc_gov_au youtube.com/ACNCvideos