Establishing the Charities Commission – the final phase?
The House of Representatives Economics Committee "Report on the Exposure Draft of the Australia Charities and Not-for-profits Commission Bills 2012' was issued on 15 August 2012. These draft Bills are designed to establish an independent national regulator, the Australian Charities and Not-for-profits Commission ('ACNC'), for the charities and not-for-profit sector.
Subject to a number of amendments the Committee has recommended (although with the dissention of the Liberal members of the Committee) that the House of Representatives pass these Bills. If this occurs in the present sitting of Parliament we expect to see the ACNC commencing on 1 October 2012 as planned.
The Committee recommended that:
- the objects of the legislation explicitly include the reduction of red tape.
- the meaning of 'public trust and confidence' be more clearly articulated.
- the guide to the Act reflect the educative role of the Commission.
- the Commissioner has discretion for a limited time to accept reports lodged with other government departments as replacement for the requirements of the Bills.
- a default set of governance standards as well as sector developed standards be considered for incorporation in the regulations.
- protections for private donors who wish to keep their philanthropy private be strengthened.
- sections covering obligations, liabilities and offences be redrafted.
- the process for revoking of registration or removal of a responsible entity be more robust.
- the Commissioner follows a fairer process in the publishing and removal of notices.
- greater discretion be given to the Commissioner not to impose administrative penalties.
- provision be made for a review of the legislation after it has been in operation for five years.
We welcome these recommendations and believe they should address, at least in part, the following concerns which have been expressed in our submission to the inquiry:
- The Commissioner having responsibility to achieve the 'report once, use often' objective;
- Improved interaction between current reporting requirements and those of the new Commission;
- Greater clarity around the educative role of the ACNC;
- Enhancements in clarifying the role of a responsible entity;
- Greater accountability for the Commissioner in performing the role; and
- A trigger to amend if the goals of the legislation are not achieved over a 5 year period.
Significant issues and challenges will remain for the sector given that there have been no changes recommended concerning a number of important matters raised with the inquiry across many of the submissions it received. These include:
- the level of reporting required for entities with revenue under $1 million;
- with no change recommended to the large threshold (revenue greater than $1 million), the onerous nature of the additional reporting for thousands of charities;
- the lack of clarity around the financial reporting framework to be applied by all charities;
- the lack of an explicit link to the work of the Australian Accounting Standards Board;
- the ability of entities to access the 'Reporting Group' framework;
- issues that will arise between information currently lodged with Government departments but not made public, compared to the public nature of the ACNC requirements and thus the continued likelihood of duplication for many charities;
- alignment of the commencement of the ACNC reporting requirements, the start date of the governance requirements and the planned date for the commencement of the Statutory Definition of Charity proposal;
- the many aspects that are still intended to be addressed through the regulations rather than within the Bills;
- the limited application of the exemptions that apply for Basic Religious Charities given the explicit exclusions within the draft Bills;
- the differential application of the requirements to entities that have a similar nature and purpose but which are differentiated by legal structure alone; and
- issues of registration by way of subtypes and interaction with many of the requirements of the Bill.
If passed by Parliament, these proposals will have substantial impacts for many charities across a range of governance, risk management, compliance and reporting requirements. Given the expectation that they are passed into law in the current sitting of Parliament and the impending commencement date of 1 October 2012, it will be important that charities are prepared for the impacts.
Moore Stephens Seminars
We are arranging a series of seminars in September to assist you in preparing for the commencement of the ACNC.
This publication is issued by Moore Stephens Australia Pty Limited ACN 062 181 846 (Moore Stephens Australia) exclusively for the general information of clients and staff of Moore Stephens Australia and the clients and staff of all affiliated independent accounting firms (and their related service entities) licensed to operate under the name Moore Stephens within Australia (Australian Member). The material contained in this publication is in the nature of general comment and information only and is not advice. The material should not be relied upon. Moore Stephens Australia, any Australian Member, any related entity of those persons, or any of their officers employees or representatives, will not be liable for any loss or damage arising out of or in connection with the material contained in this publication. Copyright © 2011 Moore Stephens Australia Pty Limited. All rights reserved.