Not-for-Profit and Charity Audit Requirements in Australia: A 2026 ACNC Compliance Guide

For the more than 60,000 registered charities operating across Australia, understanding audit and financial reporting obligations is not optional—it is a fundamental governance responsibility. The Australian Charities and Not-for-profits Commission (ACNC) sets clear requirements for financial reporting, independent review, and audit based on a charity's size. Getting these obligations right protects your organisation's registration, its reputation, and the trust of donors, grant-makers, and the public.

Understanding the ACNC Reporting Framework

The ACNC is the national regulator for charities registered under the Australian Charities and Not-for-profits Commission Act 2012. All registered charities must submit an Annual Information Statement (AIS) each year, regardless of size. However, the financial reporting and assurance requirements that apply beyond the AIS depend on the charity's annual revenue.

The ACNC classifies charities into three size categories for reporting purposes. Understanding which category applies to your organisation is the essential first step in determining your audit obligations.

Small Charities

Small charities have annual revenue of less than $500,000. These organisations must submit an Annual Information Statement but are not required by the ACNC to prepare or submit a formal financial report. There is also no ACNC requirement for an independent audit or review of a small charity's finances.

However, small charities should check their own governing documents—constitutions, trust deeds, or rules—as these may impose audit or review requirements that go beyond the ACNC's minimum obligations. Grant agreements and state-based fundraising legislation may also impose additional requirements.

Medium Charities

Medium charities have annual revenue of $500,000 or more but less than $3 million. These organisations must prepare and submit an annual financial report to the ACNC. The financial report must be either reviewed or audited by a qualified independent professional.

A review provides "limited assurance"—the reviewer concludes that nothing has come to their attention to suggest the financial statements are materially misstated. An audit provides a higher level of "reasonable assurance" and is a more rigorous process. Medium charities may choose either option unless their governing documents or grant conditions require a full audit.

Large Charities

Large charities have annual revenue of $3 million or more. These organisations must prepare and submit an annual financial report that has been fully audited by a qualified auditor. A review is not sufficient for large charities—a full audit is mandatory.

Who Can Conduct a Charity Audit or Review?

The ACNC sets specific qualification requirements for the professionals who can conduct audits and reviews of charity financial reports. Engaging an unqualified person to perform these functions is a compliance breach that can jeopardise your charity's registration.

Auditor Qualifications

Audits of charity financial reports must be conducted by one of the following: a registered company auditor (registered with ASIC under the Corporations Act 2001), an audit firm where at least one partner is a registered company auditor, or an authorised audit company registered with ASIC.

You can verify a registered company auditor's status on the ASIC professional registers at asic.gov.au. This verification step is essential before engaging any auditor for your charity.

Reviewer Qualifications for Medium Charities

For medium charities choosing a review rather than a full audit, the reviewer may be a registered company auditor, an audit firm, or an authorised audit company—or alternatively, a current member of CPA Australia, Chartered Accountants ANZ (CA ANZ), or the Institute of Public Accountants (IPA) who holds the appropriate qualifications to conduct a review.

The reviewer must be independent of the charity. This means they cannot be a responsible person (board member or trustee), an employee, or someone with a financial interest in the charity.

Financial Statement Standards for Charities

Before preparing financial statements, charities must determine whether they are a "reporting entity" under Australian accounting standards. This determination affects the type of financial statements required.

General Purpose Financial Statements

Charities that are reporting entities must prepare General Purpose Financial Statements (GPFS) that comply with all applicable Australian Accounting Standards issued by the Australian Accounting Standards Board (AASB). This is the more comprehensive and demanding option.

Special Purpose Financial Statements

Charities that are not reporting entities may prepare Special Purpose Financial Statements (SPFS), which must comply with at least six specific accounting standards, including AASB 101 (Presentation of Financial Statements), AASB 107 (Statement of Cash Flows), and AASB 124 (Related Party Disclosures).

All financial reports submitted to the ACNC must include a Responsible Persons' Declaration—a signed statement from an authorised board member or trustee confirming that the financial statements give a true and fair view of the charity's financial position.

Common Compliance Mistakes Made by Australian Charities

ACNC compliance reviews and sector research consistently identify a number of recurring errors that charities make in relation to their financial reporting and audit obligations.

Misclassifying Revenue and Size

Charities sometimes miscalculate their annual revenue, leading to incorrect size classification and inadequate assurance. Revenue for ACNC purposes includes all income received by the charity—grants, donations, fundraising proceeds, service fees, and investment income. If your revenue is close to a threshold, seek professional advice to ensure correct classification.

Engaging Unqualified Reviewers

Some charities engage accountants or bookkeepers who are not qualified to conduct an ACNC-compliant review or audit. This is a serious compliance breach. Always verify that your auditor or reviewer holds the specific qualifications required by the ACNC before engagement.

Ignoring Governing Document Requirements

Many charities have constitutions or trust deeds that impose audit requirements more stringent than the ACNC minimum. Failing to comply with your own governing documents is a breach of ACNC governance standards, even if you meet the ACNC's statutory minimums.

Late Lodgement

The ACNC requires charities to submit their Annual Information Statement and financial reports within six months of the end of their financial year. Late lodgement can result in warnings, compliance notices, and in serious cases, revocation of charitable status. Plan your audit or review timeline to allow sufficient time for completion before the lodgement deadline.

Lack of Auditor Independence

The auditor or reviewer must be genuinely independent of the charity. Engaging a board member's accounting firm, or a firm with a financial relationship with the charity, compromises independence and may invalidate the assurance provided. Document your independence assessment as part of the engagement process.

Australian Regulatory Context for Charity Audits in 2026

The regulatory environment for Australian charities is evolving, and several developments in 2026 are relevant to audit and financial reporting obligations.

ASIC Audit Quality Surveillance

ASIC has expanded its audit surveillance program for 2025–26, reviewing 25 audit files across listed and unlisted entities, including managed investment schemes and registrable superannuation entities. ASIC's focus areas include revenue recognition, asset impairment, and professional scepticism—the requirement for auditors to maintain a questioning mind rather than accepting management representations at face value.

For charities, this heightened regulatory focus on audit quality means that engaging a registered company auditor who maintains strong quality control systems is more important than ever.

Sustainability and Climate Reporting

While mandatory climate-related disclosure requirements currently apply to large listed entities (Group 1 entities) under the Corporations Act 2001, the trend toward sustainability reporting is expanding. Large charities with significant operations or government funding relationships should begin considering how ESG and sustainability metrics may become relevant to their reporting obligations in coming years.

ACNC Governance Standards

The ACNC's Governance Standards require all registered charities to maintain adequate financial controls and records. Standard 2 requires charities to be accountable to their members, and Standard 5 requires charities to identify and manage material risks. A well-conducted annual audit or review directly supports compliance with both of these standards.

Questions to Ask When Engaging a Charity Auditor

Selecting the right auditor for your charity is a critical governance decision. Use these questions to evaluate prospective auditors before engagement.

1. Are you a registered company auditor with ASIC? — This is a non-negotiable requirement for large charities and an option for medium charities. Ask for their ASIC registration number and verify it independently.
2. Do you have experience auditing charities or not-for-profit organisations? — Charity accounting has specific characteristics—grant accounting, restricted funds, volunteer services—that require sector-specific expertise.
3. Are you independent of our organisation? — Confirm there are no financial, personal, or professional relationships that could compromise independence.
4. What accounting standards framework will you apply? — Confirm whether your financial statements will be prepared as GPFS or SPFS and that the auditor is familiar with the applicable standards.
5. What is your timeline and process? — Ensure the audit or review can be completed in time for your ACNC lodgement deadline.
6. What is included in your fee, and what might incur additional charges? — Understand the full scope of the engagement and any circumstances that might lead to additional costs.
7. How do you communicate findings to the board? — A quality auditor will provide a management letter identifying any control weaknesses or compliance issues, not just a signed audit opinion.

How MyMoney® Can Help Your Charity Find the Right Auditor

Finding a registered company auditor with genuine not-for-profit experience can be challenging, particularly for smaller charities operating with limited administrative resources. MyMoney® Marketplace connects Australian charities and not-for-profit organisations with qualified, vetted auditors who understand the ACNC framework and the unique characteristics of the sector.

You can post a brief describing your charity's size, financial year, and specific audit or review requirements. Qualified auditors will respond with tailored proposals, allowing your board to compare credentials, experience, and pricing in one place.

You can also browse auditors on the MyMoney® platform to explore profiles and identify professionals with specific not-for-profit and charity audit experience before making contact.

Meeting your ACNC audit obligations is not just a compliance exercise—it is a demonstration of good governance that builds trust with donors, grant-makers, and the communities your charity serves. Engaging the right auditor is one of the most important steps your board can take to protect your organisation's integrity and registration.