Financial reporting requirements |
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An incorporated association may be a level 1, level 2 or level 3 association, depending on its current assets and revenue. The three levels have different financial reporting requirements.
Current assets are assets that are easily turned into cash. They include cash itself, shares, accounts receivable and short-term investments. Current assets do not include property or depreciable assets. Total revenue is an association’s total income during its last financial year before any expenses are deducted.
Current assets and revenue of each level association
| Level 1 | Current assets of more than $100 000, or total revenue of more than $100 000. | A certified accountant or auditor must audit the financial statements of a level 1 association. |
| Level 2 | Current assets between $20 000 and $100 000, and/or total revenue between $20 000 and $100 000. |
A certified accountant or auditor, or a person approved by the Director-General of the Department of Justice and Attorney-General, must verify the financial statements of a level 2 association. The verification statement must state ‘I have sighted the association’s financial records and the financial records show that the association has bookkeeping processes in place to adequately record the association’s income and expenditure and dealings with its assets and liabilities’. |
| Level 3 | Current assets of less than $20 000 and total revenue of less than $20 000. |
The president or treasurer must verify the financial statements of a level 3 association. The verification statement must state ‘The association keeps financial records in a way which properly records the association’s income and expenditure and dealings with its assets and liabilities’. |
Auditors
An incorporated association’s financial statements can be audited by:
- a person registered as an auditor under the Corporations Act
- a member of CPA Australia who is entitled to use the letters CPA or FCPA
- a member of The Institute of Chartered Accountants in Australia who is entitled to use the letters CA or FCA
- a member of the National Institute of Accountants who is entitled to use the letters MNIA, FNIA, PNA or FPNA.
If your auditor does not fit any of these categories, the president, treasurer or secretary of a level 2 or 3 association may lodge Associations Incorporation Form 21 - Application for approval to conduct audit or provide verification statement (PDF, 244 KB).
An auditor cannot be:
- a member of the association’s management committee
- an employee of the incorporated association
- a business partner, employer or employee of a management committee member
- a spouse or dependant of any of the above.
If your association wishes to change its auditor, it needs to pass a resolution at a general meeting.
Last reviewed 01/09/2009 |
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