The three recommendations are designed to assist charities in providing information that is useful, informative, and consistent to the perceived users of their financial report being charity donors, funders, supporters, and the public.
Recommendation 1 – Disclose information about the sources of government revenue
For a charity that received 10% or more of its total revenue from government, it should disclose the following information about the sources of its government revenue:
- the total revenue it received by each level of government (Commonwealth, State, Local Councils)
- the names of the government departments or agencies from which it received revenue (up to the top 10 departments or agencies and the amounts received),
- the revenue from providing goods and services to beneficiaries who receive related government financial assistance (for example, payments from the National Disability Insurance Agency). Although this revenue is not directly received from government, it is ultimately funded by government.
Recommendation 2 – Disclose economic dependency on government revenue
For a charity dependent on government for significant revenue or financial support, it should include an economic dependency note in its financial statements.
For a charity to be deemed dependent, indicators may include where a charity would need to significantly reduce its programs or services without a particular source of government funding available, or a significant government contract will expire within the next reporting period.
Recommendation 3 – Disclose funding received from government but not yet recognised as revenue
For a charity that prepares Special Purpose Financial Statements and does not include the disclosures required by AASB 15 Revenue from Contracts with Customer and AASB 1058 Income of Not-for-Profit Entities, it should disclose funding from government that has been received but not yet recognised as revenue.
Revenue received in advance that is presented as a liability on the balance sheet, due to the charity having not yet satisfied performance obligations, should be disclosed separately from other revenue received in advance within a note disclosure.
If you have any questions regarding the ACNC best practice guide and your reporting obligations as a charity, please get in touch with your local Bentleys advisor.
Disclaimer: This information is general in nature and should not be relied on as advice. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs and seek professional advice before making any decisions based on this information.