Tier 1 incorporated associations financial reporting

Tier 1 (large) incorporated associations must ensure their financial records accurately explain their financial transactions and financial position.

They  must ensure these financial records are sufficient to enable financial statements to be prepared in accordance with the Australian Accounting Standards. Tier 1 incorporated associations are those whose:

• total revenue in the income and expenditure statement (such as, gross receipts) for a financial year is over $250,000, or
• current assets are more than $500,000.

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.

Incorporated associations must continue to hold their annual general meeting (AGM) within 6 months of the end of their financial year.

Incorporated associations must lodge annual financial summaries in the approved form:

• within one month  
• after the AGM, and
• no later than 7 months after the incorporated associations financial year end with NSW Fair Trading. 

Extension of time

An incorporated association 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 it:

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

Visit incorporated associations forms and fees for more information on lodgement.

Complying with Australian Accounting Standards

Tier 1 incorporated associations with less than $2 million in annual revenue do not need to fully comply with Australian Accounting Standards. However, the financial statements must satisfy the Class Order 11/01 financial reporting requirements. The financial statements must contain:

• a statement of income and expenditure that lists, by category, the sources of income and expenses from running the incorporated association
• a balance sheet that sets out current and non-current assets and liabilities
• movements in the equity section of the balance sheet. These are changes in retained surplus or accumulated loss, and in any reserves
• notes to the financial accounts. These include, at least, a statement of accounting policies relevant to the incorporated association’s transactions
• mortgages, charges, and other securities on any property owned by the incorporated association
• a separate income and expenditure statement and a balance sheet for every trust that the incorporated association is the trustee
• a consolidated income and expenditure statement and a balance sheet. If the incorporated association has any controlled entities, they must consolidate their investment in any subsidiaries, as defined by Australian Accounting Standards Board (AASB) 127. This excludes any trusts for which it is a trustee.

The Regulatory Guide A1 – Financial Reporting Requirements for a Class of Tier 1 Associations is available to assist those persons preparing and auditing financial statements for Tier 1 incorporated associations that may qualify for the exemption provided in Class Order 11/01.  

Tier 1 incorporated associations not covered by Class Order 11/01 must prepare full financial statements. These must include a cash flow statement and all notes to the accounts in accordance with the Australian Accounting Standards. 

Auditing of Tier 1 incorporated association’s financial statements

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.
• 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.

Conducting an audit of Tier 1 incorporated associations

Any of the following can conduct an audit:

• a registered company auditor
• an authorised audit company, or
• the holder of a current public practice certificate from any of:
  • the Institute of Chartered Accountants Australia and New Zealand
  • CPA Australia, or
  • the Institute of Public Accountants.

In most cases*, an audit may 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 to the incorporated association (other than audit services)
• a committee member, or
• the incorporated association’s public officer.

*unless the auditor met the requirements for Class Order 10/2 exemption on auditor independence

Exemption from audit requirement

In limited situations, an incorporated association may be exempted from the audit requirement in a given year. See auditor qualifications and audit exemptions for information on current exemptions or applying for an exemption. 

Exemption for registered charities

An NSW incorporated association registered as a charity with the Australian Charities and Not-for-profits Commission (ACNC) may be exempt from its financial reporting requirements to NSW Fair Trading. It does not need to lodge its annual financial summary with NSW Fair Trading or pay the annual fee.

To use this exemption, the ACNC’s Annual Information Statement for NSW organisations includes extra questions to collect information for NSW Fair Trading.  

Information is available in Exemption Order No. 001/18 Financial reporting requirements.

An NSW incorporated association also registered as a charity with the ACNC, must lodge an Annual Information Statement. This includes financial statements if required. These documents must be lodged with the ACNC each financial year. The incorporated association must answer all questions. The ACNC will then share this information with NSW Fair Trading.

The incorporated association must continue to hold their AGM within 6 months of the end of their financial year. All financial statements must be prepared as required by the Associations Incorporation Act 2009 (the Act). They must be submitted to its members at this meeting. As a Tier 1 incorporated association, this would include preparing and providing an audit report.

All incorporated associations must notify NSW Fair Trading of any changes to the incorporated association. This includes the incorporated association’s name, details, constitution, or public officer.

Visit incorporated associations forms and fees for more information.

You can confirm your incorporated association's charity status by searching the ACNC charities register.

Visit the ACNC website for more information regarding reporting obligations for charities.