Tier 1 incorporated associations financial reporting

Definition of a Tier 1 incorporated association 

You are a Tier 1 (large) incorporated association if your:

• total revenue in the income and expenditure statement (such as, gross receipts) for a financial year is over $500,000, or
• current assets are more than $1,000,000.

Current assets are assets held by the incorporated association at the end of its last financial year. It includes amounts held in financial institutions, stocks, and debentures. Real property or depreciable assets are excluded.

Auditing requirements

The financial statements must be audited in time for submission to the incorporated association’s AGM. The auditor’s report must:

• be prepared per the Australian Auditing Standards, and
• state if the incorporated association has kept the necessary records needed to prepare financial statements. The statements must adhere to Australian Accounting Standards. 

For more information on the Australian Auditing Standards, visit the Auditing and Assurance Standards Board website.

Auditors must be qualified and independent 

An audit may be conducted by:

• a registered company auditor
• an authorised audit company
• a member of a professional accounting body holding a Public Practicing Certificate or Certificate of Public Practice issued by:
  • Chartered Accountants Australia and New Zealand
  • CPA Australia
  • Institute of Public Accountants
• a person NSW Fair Trading approves as a qualified auditor.  

An audit must not be conducted by any person who, within the last 2 years, is or has been:

• a member of the incorporated association
• an employee or provider of professional services (other than audit services) to:
  • the incorporated association
  • a committee member
  • the incorporated association’s public officer.

You can apply to NSW Fair Trading for approval of an unqualified person as auditor if any of these conditions exist. 

Apply for approval to have an unqualified person as auditor 

NSW Fair Trading can approve the appointment of a person or firm as auditor of an incorporated association if they do not hold any of the required qualifications but they have: 

• particular other relevant expertise or qualifications, or
• suitable experience. 

Applications for auditor approval must: 

• be in writing
• set out relevant qualifications and experience
• be accompanied by the prescribed fee. 

Visit incorporated associations forms and fees for more information.

Request an extension of time to hold an AGM or lodge a summary

You should lodge a Form A11 Application for extension of time for holding annual general meeting or lodging annual summary of financial affairs with the prescribed fee if your incorporated association:

• cannot hold the AGM within 6 months after the end of its financial year, or
• is unable to lodge the Form A12 T1 Annual summary of financial affairs by the due date.

Visit incorporated associations forms and fees for more information.

Request an exemption from financial reporting requirements

Your incorporated association can request an exemption from preparing or auditing financial statements in limited circumstances.

Request an exemption from preparing financial statements

If your incorporated association believes it cannot prepare its financial statements in accordance with the Australian Accounting Standards, you can apply to NSW Fair Trading for an exemption from the full reporting requirement under the Associations Incorporation Act 2009. 

Applications must be in writing and accompanied by the prescribed fee. Visit incorporated associations forms and fees for more information.

Request an exemption from audit requirement

In limited situations, an incorporated association may be exempted from the audit requirement in a given year.

A Tier 1 incorporated association can apply for an exemption from auditing its financial statements. Applications are assessed against several criteria, including:

• the nature of the incorporated association and its financial transactions
• any other audit requirement, for example, audit provision in the constitution or requirements under other legislation or regulatory agency
• the level and nature of transactions and accounts, including variance from Tier 1 thresholds
• the quality of financial statement preparation. This includes ensuring transactions are recognised and measured according to the Australian Accounting Standards Board
• the proportion of assets held as liquid assets
• the level of external creditors who may rely on the financial statements
• the composition of incorporated association membership.

Applications must be in writing and accompanied by the prescribed fee.

Visit incorporated associations forms and fees for more information.