When running a registered charity, it is crucial to ensure that you are aware of your reporting obligations to the Australian Charities and Not-for-profits Commission (ACNC). As discussed in the article Twenty20 Hindsight, the consequences of not meeting your financial and operational record-keeping and reporting obligations can be severe. When developing your record-keeping policy for your charity, there are several factors you should consider, including the role of the Board in overseeing charitable works.
Financial Records and Operation Records
Do you have these readily available and up to date? For example, is it obvious where payments and transactions have come from, do they follow standard accounting policies and are the records secure?
Do you have a system in place that defines record keeping? For example, are particular software, naming conventions and other documents accessible to those who require access? Has this been discussed and passed onto your staff members?
Another way to ensure that records are properly kept is to provide up to date financial reports to your charity’s Board at regular intervals as required.When you are working with overseas charities and workers, it is important to have documents available in English so that records can be properly reviewed, if required.
Security and Personal Information
Regarding technical systems, you should be sure that your reports are secure and password protected and any filing cabinets are locked. For example, do you have backup systems so that records are kept in more than one place?
Timing of Record Storage
Records are typically stored for seven years. You should then ensure that records are correctly labelled so that they are kept for the appropriate period and subsequently destroyed.
As a board member of a charity, it is important to understand the financial issues facing your charity. This includes understanding compliance around fundraising and what your charity can and can’t do. You should also understand and be aware of the reporting obligations of your charity, the charity type and their particular reporting obligations to the ACNC. You should be sure you have in place accounting practices so that annual reports are correctly submitted and have your charity audited if required under the ACNC regulations.
Financial controls are also a useful way to ensure that there is oversight as to the way money is spent and used in the organisation. The Shane Warne Foundation, when audited provided a good example of an organisation that did not appear to have in place strong financial controls as to where donations originated. By having financial controls, you also reduce the risk that funds can go missing or be misused.
Board Members should also be up to date with the requirements of a registered charity. For example, ensure that the work that the charity is undertaking is for charitable purposes. Registered charities are also required to keep the ACNC up to date of any changes as they arise and ensure that the charity is meeting the relevant governance standards.
As a Board Member, your charity will also have in place governing documents which will set out the role of the Board in more detail and obligations.
Other reporting requirements include maintaining specific records including ASIC, ATO, and other regulatory bodies in your state or territory. You should ensure that you have policies in place for each of the relevant organisations to ensure compliance.
What if my Charity Doesn’t Have a Board?
As an unincorporated association, there are still many measures your not for profit can put in place, to ensure that you have appropriate financial reporting and make sure that you keep correct and up to date records. In this case, committee members have the oversight role in seeing that the charity is properly run. A set of rules can also ensure the proper governance of the non-profit and that the charity meets its obligations as required.
If you are unsure whether your registered charity is meeting its obligations or if you require assistance as a Board Member of a charity, call LegalVision’s charity lawyers on 1300 544 755 or fill out the form on this page. We can address compliance issues to help you improve your systems and procedures. We can also help you from start to finish with not for profit structuring, set up, registration and winding-up.