ACNC releases new best-practice disclosures guide

The ACNC has published a new best-practice guide for charities reporting on government revenue they receive.

Donors, funders, supporters, and the public want to know whether a charity receives funds from government, their size, and who provides them.

Nearly half of charity-sector revenue comes from governments, and increasingly people are viewing financial details on the ACNC’s charity register, often to inform decisions on charitable giving.

Annual Financial Report Disclosures – Best Practice helps charities provide useful, consistent information, enhancing transparency and accountability across the sector.

The ACNC recommends using disclosures to ensure that annual financial-report supplements and matches information in annual information statements.

The commission believes that the move might lead to more cuts to red tape.

Three recommended disclosures of government funding in a charity’s annual financial report are:

Disclose information about the sources of government revenue
For a charity that received 10 per cent or more of its total revenue from the government, it should disclose the following information about the sources of its government revenue:
  • the total revenue it received by each level of government
  • the names of the government departments or agencies from which it received revenue (up to 10), as well as the total amounts it received from each, and
  • the revenue from providing goods and services to beneficiaries that receive related government financial assistance (for example, payments from the National Disability Insurance Agency).
Disclose economic dependency on government revenue
For a charity dependent on the government for significant revenue or financial support, it should include an economic-dependency note in its financial statements.
Disclose funding received from the government but not yet recognised as revenue
For a charity that prepares special-purpose financial statements and does not make the disclosures required by AASB 15 and AASB 1058, the ACNC recommends disclosing funding from the government that has been received but not yet recognised as revenue.

To ensure that financial statements are clear and easy for users to read and understand, the commission recommends making most disclosures in notes to financial statements rather than in statements themselves.

Recommended disclosures are not intended to replace existing disclosure requirements under Australian accounting standards. For some charities, the recommended disclosures are already required. Rather, they provide the ACNC’s view of best practice in disclosing this kind of financial information and encourage charities to adopt this approach.

Consider the recommendations when preparing your charity’s annual financial report.

Take a look at detailed examples and further information in the guide Annual financial report disclosures - best practice | Australian Charities and Not-for-profits Commission (