The ACNC has recently published recommended best practice disclosures for a charity’s annual financial report which go over and above disclosures required under Australian Accounting Standards.
The ACNC advises that this is to ‘help charities provide information that is useful, informative and consistent, and to encourage transparency and accountability’.
The disclosures aim to provide more information to users on government funds received by charities as nearly half of the revenue of the charity sector comes from government. These disclosures may also allow the ACNC to pursue more ways to cut red tape for charities, particularly when it comes to duplicate reporting in the form of grant acquittals.
The ACNC recommends additional disclosures in three areas, to be included in the notes to the financial statements, as follows:
- Disclosure information about the sources of government revenue
- Disclose economic dependency on government revenue
- Disclose funding received from government but not yet recognised as revenue.
Along with the recommendations which are summarized below, the ACNC has also showed worked examples of the additional disclosures here
Sources of government funding
Where more than 10% of total revenue is received from government, the ACNC recommends the following additional information be disclosed:
- The total revenue received by each level of government
- The names of the government departments or agencies from which it received revenue, as well as the total amounts it received from each
- The revenue from providing goods and services to beneficiaries who receive related government financial assistance.
This recommended disclosure relates to charities that are dependent on the government for significant revenue or financial support.
Government funding that is received and deferred
This recommends the specific disclosure of any government funding that has been received and deferred as a liability at balance date, being separate to any non-government amounts that were received and deferred.