Institute guidance for not-for-profits

Key Points

  • The Institute has launched the 2011 guidance on annual and financial reporting for the not-for-profit (NFP) sector
  • This latest update incorporates major regulatory changes and accounting standard improvements
  • The recommendations from the 2009 PwC Transparency Awards have also been included in this guidance.

As part of its ongoing initiatives in not-for-profit reporting, in 2011 the Institute has published the third edition of Enhancing not-for-profit annual and financial reporting, which was first launched in 2007. The guidance is a tool designed specifically for the NFP sector to attain best practice in their annual and financial reports, as well as providing an overview of applicable legislation and resources.

Enhancing not-for-profit annual and financial reporting  is available in full or by Chapter below:

Background

The 2006 paper included several recommendations to enhance the quality of not-for-profit financial and annual reporting. In February 2007 the Institute then published its first edition of the report Enhancing not-for profit annual and financial reporting, which outlined how these enhancements might be implemented.

The 2011 update

The 2011 guidance builds on the best practice objectives of the previous editions by including updated changes to Australia’s reporting environment, specifically in the areas of corporate law, state laws and the introduction of accounting standards incorporating the Reduced Disclosure Regime (RDR). Major changes in this edition include:

  • A new section, entitled ‘Future Developments’, commenting on various NFP initiatives currently underway
  • Modifications to the recommendations to enhance annual and financial reporting, considering issues that arose from the global financial crisis and the 2009 PwC Transparency Awards recommendations
  • Revised directors’ report reflecting the recent changes to the Corporations Act
  • Updated decision flowcharts incorporating the ability to adopt RDR
  • Shading throughout the illustrative financial statement highlighting disclosure areas that can be reduced by adopting RDR
  • Additional guidance on RDR requirements and the revised reporting and audit requirements for companies limited by guarantee.

These changes reflect the increasing momentum for reporting, providing stakeholders with a greater understanding of the key drivers of a business, through increased disclosures on strategies, objectives and performance against objectives. The paper expands on these areas of reporting, aligning them with GRI reporting principles, the Institute’s work on broad based business reporting and the emerging concept of integrated reporting.

The tool provides practical guidance on how NFPs can implement these enhancements, including checklists, flowcharts and tables. An illustrative financial report is included which includes common disclosures relevant for NFP entities.

The changes to the annual report section of the paper stem from recommendations to enhance annual reporting in the NFP sector from the 2009 PwC Transparency Awards as well as research carried out by the Institute.

The PwC Transparency Awards

The PwC Transparency Awards, undertaken in collaboration with the Institute and the Centre for Social Impact (CSI), recognise and encourage improvement in the quality and transparency of reporting in the Australian NFP sector.

For the first time, the 2010 PwC Transparency Awards, held Wednesday 13 April 2011, included two separate categories and a newly introduced award: 

  • Revenue greater than $20m - won by Mission Australia
  • Revenue from $5m to $20m - won by Camp Quality
  • Most Improved Award - won by Plan International Australia.

The jury was presented with a shortlist of three finalists in each category to decide the winner.

Article last updated 16 April 2012