Friday, 8 Mar 2019
Reviewing and auditing of financial reports is not just limited to the for-profit sector. It is equally applicable to the not-for-profit entities and the 55,000 charities registered in Australia. The financial statements of non-profits in Melbourne are audited for a variety of reasons such as legislation obligations, funding provider’s requirements, or the need of the entity’s own constitution or its stakeholders.
Naturally, NFPs are on the lookout for bookkeepers in Melbourne to meet the criteria mentioned above and obligations. An experienced bookkeeper can take care of these reporting requirements and keep your books in an organised manner with accurate details of all the incomings and outgoings. Thus bookkeeping helps in the audit and reporting tasks outlined by the regulators.
Financial Reporting Requirements For NFPs
All ACNC registered charities in Melbourne whose annual turnover is above $250,000 have to submit their financial reports within six months of the end of the fiscal year. The entities whose turnover is below this threshold are required to provide only the Annual Information Statement and no other financial statements.
The companies which are limited by guarantee and are registered with the ACNC have to submit their annual reports generated by bookkeepers to the ACNC instead of ASIC. In some cases, a lot of grant-funded not-for-profit organisations in Melbourne are obligated by their funding agreement to carry out an audit by a registered company auditor irrespective of the turnover.
For companies that are limited by guarantee, but are not registered with the ACNC, and have an annual turnover of less than $250,000 do not have to submit any financial reports or conduct audits. They are also exempted from preparing director’s report, and their bookkeepers do not have to inform the members about the annual reports.
It has to be done only if the constitution of the organisation obligates sending reports to the members. On the other hand, if these companies have total revenue above $250,000, they have to submit financial reports prepared by their bookkeepers. They can choose between an audit and a review if the earning is below $ 1million and the statements need to be audited yearly by a registered company auditor if the revenue is above $1 million.
Audits and Reviews of Financial Reports
Beginning from the 2014 reporting period, both medium and large sized charities are submitting financial reports prepared by bookkeepers which are duly audited or reviewed. The audit requirements depend on a variety of criteria which have been laid down by ACNC, ASIC, and the state regulations.
They are also dependent on the turnover of the non-profit organisation in Melbourne. For instance, if the annual turnover is below $250,000, the reporting obligations for NFPs are reduced. If the revenue of the entity is below $1 million, then they can choose to get an audit or a review done. If the annual turnover is $1 million or above, then the non-profit organisation must get the reports made by the bookkeepers audited.
The review is usually a less detailed assessment by the reviewer which limits the level of assurance that is required to determine the conclusion. Even an audit does not offer total assurance of the financial statements created by the bookkeeper of being entirely correct.
An audit must be in accordance with the Australian auditing standards (ASA) which allow the auditor to identify the inaccuracies and mistakes in the financial reports created by a bookkeeping company in Melbourne. It includes a conclusion given by the auditor which confirms whether the reports appropriately represent the financial performance and inflow and outflow of cash in the entity.
The review is performed on the basis of Australian standards for review engagements which include an opinion of the reviewer. It states that nothing makes them believe that the reports are not a fair representation of the organisation’s financial health. That is why bookkeepers are needed to maintain transparent accounts.
Audit Or Review, Which Should Be Chosen?
When the charity has an option to choose between the two, it should decide by understanding the circumstances and consulting a seasoned bookkeeper. The advantages of an audit are that the level of assurance of the charity meeting the requirements is higher and the assessment of the statements is more detailed.
The disadvantages of conducting an audit in Melbourne are that it can prove to be expensive, time-consuming, and finding a qualified auditor may not be easy. On the contrary, the advantages of conducting a review in Melbourne are that it is economical, time-saving and it is quite easy to hire a reviewer.
The downfall of a review is that the evaluation is limited and the level of assurance is restricted which may not allow the reviewer to identify the problems in the reports. An audit can be conducted by a Registered Company Auditor (RCA) or an authorised audit company or a firm which has at least one RCA who is an Australian resident. A review can be undertaken by members with CPA/FCPA status.
Obligations For Incorporated Associations
The non-profit associations have reporting obligations as laid down by the state and territory regulators which chiefly depend on the total turnover and are appropriately created by a bookkeeping company. In ACT, Tasmania and South Australia, the ACNC registered and incorporated entities do not have to report to the regulators.
They only submit reports prepared by their bookkeeping company to the ACNC. If these associations are not registered with ACNC, they have to submit an annual statement and audited financial reports in a timeframe of six months after the end of the financial year. The ACNC registered charities in other regions have to provide reports created by their bookkeeping company to both the ACNC and the state and territory regulators.
Non-profit entities in Victoria have to report to the Consumer Affairs Victoria for the submission of a yearly report within one month of the conclusion of the AGM. The NFPs in Melbourne with an annual turnover less than $250,000 do not have any reporting obligations.
The organisations which have total revenue below $1 million can choose between getting the accounts reviewed and audited, and need to provide financial statements to the Consumer Affairs. The NFPs which are making earnings above $1 million have to conduct an audit and submit financial statements organised by a bookkeeper to Consumer Affairs.
The obligations framework set by the ACNC is required to maintain, preserve and promote the trust and faith of the people in the not-for-profit sector. It is not easy to keep track of all the compliance requirements as they vary from state to state. Thus NFPs need to rely on bookkeepers to stay updated and in line with the regulations.
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