ACNC releases AIS findings

The ACNC has released findings from 250 annual information and financial statements submitted for the 2021 reporting period.

Improvements compared with the previous year were:

  • 79 per cent of financial statements reviewed correctly identified the ACNC Act as the relevant reporting framework, an increase of 8 per cent compared with the previous year
  • 86 per cent of auditor’s or reviewer’s reports made the required reference to the ACNC Act compared with 79 per cent in 2020 and 70 per cent in 2019
  • 97 per cent of charities attached a responsible persons’ declaration with their financial statements, a percentage that mirrored 2020 levels
  • 74 per cent of 2021 AFRs reviewed contained a complete set of financial statements, an improvement from 66 per cent in 2020, and
  • 91 per cent of responsible persons’ declarations attached to AFRs in the 2021 reporting year were correctly signed and dated, compared with 89 per cent in 2020. Of these attachments, 81 per cent of charities mentioned compliance with the ACNC Act, reflecting a significant improvement from 66 per cent in 2020.

In the 2021 review, fewer than 1 per cent of responsible persons’ declarations failed to contain the solvency declaration – an improvement on the 2020 figure of 5 per cent.


Observations over the years:

  • The accuracy of the type of financial report selected in annual information statements has continued to decrease. Only 57 per cent of charities correctly selected the type of AFR in 2021, down from 65 per cent in 2020
  • In 2021 AISs, 97 per cent of charities correctly identified whether they had provided a consolidated financial report for several entities, a slight drop from 98 per cent in the previous year
  • 15 per cent of charities incorrectly reported expenses using a mixture of nature and function in 2021, compared with 23 per cent in 2020 and 16 per cent in 2019
  • Like the figures in last year’s reviews, only a small number of charities provided incorrect financial information in AISs from their AFRs. In 2021 the biggest errors were for ‘revenue from government’ and ‘employee expenses’, which were both incorrectly transposed from AFRs to AISs in 4 per cent of reviews completed
  • In the 2021 reporting year, 98 per cent of charities attached an auditor’s or reviewer’s report, compared with 91 per cent in the previous year. The figure represents the strongest result since the AFR-review process began. Of the reports, 94 per cent were signed and dated, and 89 per cent complied with new auditing standards, both slightly lower results than 2020
  • Most of the common disclosure issues identified in 2020 were also present in the 2021 review, including insufficient or no disclosure about whether the charity was a for-profit or not-for-profit for financial-reporting purposes, the accounting estimates and judgements management had made in the application of a charity’s accounting policies, and the fees paid to auditors/reviewers, and
  • 10 per cent of audit reports contained a modified opinion. Of these, 54 per cent did not accurately report the modification in their AIS.


New observations:

  • Of the charities required to disclose related-party transactions, only 3 per cent failed to do so. However, disclosure of key management personnel compensation was not provided in 14 per cent of the applicable charities’ general-purpose financial statements
  • 5 per cent of charities prepared GPFSs – simplified disclosure requirements, adopting AASB 1060 General Purpose Financial Statements – Simplified Disclosures for For-Profit and Not-for-Profit Tier 2 Entities before it replaced the General Purpose Financial Statements – Reduced Disclosure Requirements framework for reporting periods from 1 July 2021, and
  • Audit reports were provided in a greater number of AFRs examined (98 per cent), indicating a trend away from review reports.