Welcome to Beyond The Numbers, our monthly newsletter which brings you a summary of the latest developments from local and international standard setters and regulators.
Click on one of the Newsletter sections below:
ACNC highlights areas for improvement in charity compliance
The Australian Charities and Not-for-profit Commission (ACNC) has released its latest report on compliance reviews conducted across the sector. The ACNC focused on areas like governance, financial management, sustainability, overseas programs, and responses to natural disasters like bushfires. While many charities demonstrated strong practices, the review identified potential areas for improvement in some organisations.
Key findings include:
- Governance concerns: Some charities faced issues with board composition, conflicts of interest, and inadequate risk management practices.
- Financial management: Concerns were identified regarding financial reporting, record-keeping, and internal controls.
- Overseas programs: The ACNC highlighted the need for better risk management and due diligence for charities operating internationally.
- Bushfire responses: While many charities played a crucial role in disaster relief, some lacked proper planning and documentation.
Upcoming AASB board meeting
The agenda and papers for the next Australian Accounting Standards Board (AASB) meeting on 7 – 8 March are available. The meeting will:
- Continue development of a Tier 3 Not-for-profit reporting framework;
- Consider feedback and next steps arising from the post implementation review of income of Not-for-profit entities (AASB 15 and AASB 1058); and
- Finalise proposed Tier 2 disclosures relating to Supplier Finance Arrangements.
APESB to address firm culture and governance
Recent ethical concerns in the accounting profession have prompted the International Ethics Standards Board for Accountants (IESBA) to prioritise “Firm Culture and Governance” within its new strategy. This decision follows discussions with the Australian Accounting Professional & Ethical Standards Board (APESB) and feedback from global stakeholders, highlighting the need to address ethical issues at the firm level.
The IESBA has established a dedicated working group led by APESB’s CEO to explore this area, aiming to bolster ethical conduct and build stronger public trust in the profession.
CA ANZ supporting trust and accountability
Chartered Accountants Australia and New Zealand (CA ANZ) has released a document titled “Going Further – A roadmap to enhanced trust and accountability” outlining 14 specific actions to enhance trust and accountability in the profession. Some of these actions can be directly implemented by CA ANZ, while others necessitate support from the government and stakeholders.
One of the identified actions involves a mandatory boost in ethics-focused Continuing Professional Development (CPD) for CA ANZ members. This action entails a requirement of six hours of ethics-focused CPD per triennium, an increase from the previous requirement of two hours.
Simpler financial reporting requirements for small Queensland builders
The Queensland Building and Construction Commission (QBCC) has relaxed the Minimum Financial Requirements (MFR) for small licensed builders.
Small builders in Queensland categorised as SC1, SC2, 1, 2, or 3 licensees are now allowed to use Special Purpose Financial Statements (SPFS) for their MFR reports, instead of the previously required General Purpose Financial Statements (GPFS). The MFR report must still comply with Australian Accounting Standards AASB 101, AASB 107, AASB 108, AASB 1048, and the recognition and measurement requirements of Australian Accounting Standards applicable to the licensee’s financial position.
The change is effective for MFR reports for the quarter ending 31 December 2023, and onwards. The reporting requirements for category 4 – 7 builders are not affected by the changes.
Registering as a charity that advances social or public welfare
The ACNC has published a decision summary outlining factors it considers when determining an organisation’s eligibility to register as a charity. An organisation’s purpose of relieving necessitous circumstances qualifies it for registration with the subtype of advancing social or public welfare.
This is the second resource published as part of the ACNC Secrecy Reforms Project.
Guide to managing conflicts of interest by charities
Under ACNC Governance Standard 5, Responsible People have various duties, some of which are linked to disclosing and managing conflicts of interest.
The ACNC has issued a guide aimed at Responsible People to help explain what conflicts of interest are and how they can be managed.
ISSB February update
The summary of the International Sustainability Standards Board (ISSB) meeting held on 21 February is now available.
The ISSB:
- discussed the development of educational material on the concept of ‘materiality’ in the context of IFRS Sustainability Disclosure Standards; and
- finalised the criteria for prioritising new research and standard-setting projects.
ISSB podcast explores key takeaways from the IFRS Sustainability Symposium
ISSB Chair Emmanuel Faber and Vice-Chair Jingdong Hua reflect on the key takeaways from the IFRS Sustainability Symposium which took place in New York City in February, and progress to support the implementation of the ISSB Standards around the world.
Financial instruments with characteristics of equity
The IASB issued proposals to amend and clarify the classification of financial instruments as debt or equity. The proposals include:
- clarification of the underlying classification principles of IAS 32 to help companies distinguish between financial liabilities and equity;
- disclosures to further explain complexities around instruments that have both financial liability and equity characteristics; and
- presentation requirements for amounts attributable to ordinary shareholders separately from amounts attributable to other holders of equity instruments.
The deadline for submitting comment letters to the IASB is 29 March 2024.
IFRIC agenda – March 2024
IFRIC has released its agenda for the upcoming March 2024 meeting. Topics include:
- Climate-related Commitments: IFRIC will further discuss feedback on its tentative agenda decision on accounting for climate commitments issued in December 2023. While IFRIC believes the existing guidance in IAS 37 is sufficient to identify situations requiring provision recognition, it will further consider whether additional clarification may be needed for specific scenarios, particularly those involving “emission effect commitments.”
- Contingent Payments in Acquisitions: The IFRIC intends to finalise its previous tentative decision on accounting for payments contingent on continued employment during handover periods following an acquisition. This means such payments will continue to be treated as compensation for post-acquisition services, not as additional acquisition consideration, unless the service condition is deemed insignificant.
Draft legislation for climate-related disclosures issued
Nexia issued its publication on the Treasury’s Climate-related financial disclosure: exposure draft legislation.
The draft legislation introduces mandated climate-related financial disclosures for all entities required to report under Chapter 2M of the Corporations Act phased in over three years commencing 1 July 2024 based on the entity’s size.
The climate-related disclosures will be included in a separate sustainability report forming part of an entity’s annual report and will incorporate the proposed Australian Sustainability Reporting Standard SR1 Disclosure of Climate-related Financial Information.
Furthermore, the draft legislation imposes assurance requirements on the entity’s sustainability report.
Treasury’s Exposure Draft closed for comment on 9 February 2024, and a Bill is expected to be introduced into Parliament in the coming weeks.
The material contained in this publication is for general information purposes only and does not constitute professional advice or recommendation from Nexia Edwards Marshall NT. Regarding any situation or circumstance, specific professional advice should be sought on any particular matter by contacting your Nexia Edwards Marshall NT Adviser.
