New tier thresholds for incorporated associations will come into effect from 1 July 2024. Your association may have different financial reporting requirements depending on the total revenue of the association for the financial year ending on or after 1 July 2024.
All incorporated associations must keep financial records and prepare financial statements each year so that members can understand how funds have been used.
The obligation to prepare financial statements and present these to the association's members is separate from the obligation to lodge an annual statement with Consumer Affairs Victoria each year. For information about lodging your annual statement, view Lodging an annual statement for incorporated associations.
Tiers of associations until 30 June 2024
Financial reporting requirements vary depending on the total revenue of the association. Under the Associations Incorporation Reform Act 2012 (the Act), an association falls within one of three tiers according to its total revenue. The following tier thresholds are in effect until 30 June 2024:
- Tier 1 - less than $250,000
- Tier 2 - $250,000 to $1 million
- Tier 3 - more than $1 million.
Total revenue is an association’s total income from all its activities during its financial year, before deducting any expenses including the cost of goods sold.
Tiers of associations from 1 July 2024
The Association Incorporation Reform Regulations 2023 prescribe new tiers based on the total revenue of the association. For an association’s financial year ending on or after 1 July 2024, the association will fall within one of the following tiers according to its total revenue:
- Tier 1 – less than $500,000
- Tier 2 - $500,000 to $3 million
- Tier 3 – more than $3 million.
Associations will be required to meet the financial reporting requirements that apply based on the total revenue for that financial year.
Record keeping (all tiers)
Your association must keep financial records that:
- record and explain its transactions, financial position and performance, and
- allow the preparation of 'true and fair' financial statements.
Financial records include:
- invoices
- receipts
- cheques
- documents that record the above (including bank statements)
- working papers and other documents that explain how you prepare your financial statements.
Your association should maintain and update these records throughout the year. An incorporated association must keep financial records for seven years.
Preparing financial statements (all tiers)
Your association must prepare its financial statements as soon as practical after the end of its financial year.
An association must present its completed financial statements to members at the annual general meeting (AGM). You must hold the AGM within five months from the end of the financial year.
Financial statements must contain:
- income and expenditure (Income Statement) for your association’s financial year
- assets and liabilities (Balance Sheet) at the end of its financial year
- other documents required by accounting standards, such as a cash flow statement
- notes to the account, which must include:
- information required by the accounting standards
- information necessary to give a true and fair view
- information required by the provisions of the Act and its regulations.
In the notes to the account, you must disclose:
- any mortgages, charges and securities affecting any property of the association at the end of its financial year
- any trust, held on behalf of the association by a person or body other than the association, in which funds or assets of the association are placed
For each trust your association was a trustee of during any part of its financial year, you must disclose any:
- income and expenditure (Income Statement) of the trust during that period
- assets and liabilities (Balance Sheet) of the trust during that period
- mortgages, charges and securities affecting any property of the trust at the end of that period.
Sample Income Statement
This is not a standard template, you should use this as a guide only. You should write the report according to your association’s requirements and circumstances.
Sample incorporated association Income Statement (Word, 216KB)
Certifying financial statements by the committee of the association (all tiers)
- The treasurer should present the financial statements at a committee meeting.
- Record the presentation of the financial statements in the minutes of the committee meeting.
- If satisfied with the financial statements, the committee can pass a resolution confirming the statements give an accurate view of the association’s financial affairs. Two committee members must sign a certificate to this effect - Schedule 1, Regulations 18 19 & 20, Form 1 (Word, 25KB). You don’t need to lodge this certificate with us.
- At the AGM, the committee must present the financial statements and the certificate signed by two members and must include a copy of the documents in the AGM minutes.
- Record any resolution passed about the financial statements in the minutes of the AGM.
- A certificate of Submission of financial statements to annual general meeting (Word, 24KB) must be signed by one committee member after the AGM and kept on record. You don't need to lodge this certificate with us.
Tier 1 associations do not have any additional reporting requirements to members. They do not need to have their financial statements externally reviewed or audited unless:
- their rules state otherwise (audit or review)
- a majority of members vote to do so at a general meeting (review only), or
- the Registrar of Incorporated Associations directs them to do so.
For more information on meetings, view Incorporated association meetings.
Auditing and reviewing requirements (tiers 2 and 3 only)
For tier 2 or tier 3 incorporated associations with higher levels of revenue, there are further financial reporting requirements. Your association will require professional assistance to prepare your financial statements.
As part of the annual statement process, tier 2 and tier 3 associations will need to lodge a copy of their financial statements with Consumer Affairs Victoria. These are lodged as part of the annual statement process. The public can request access to financial statements lodged with us, there is a fee for this service for more information see Fees and forms for incorporated associations.
Tier 2 and tier 3 associations must follow the Australian Accounting Standards when preparing their financial statements. Financial statements may be either:
- general purpose financial statements, which are appropriate for larger entities whose financial health may be of interest to a range of external stakeholders (including funding bodies), or
- special purpose financial statements, which are less comprehensive and more appropriate for smaller entities with few or no external stakeholders.
The committee of the association determines which type of statement should be prepared. It should do so in line with the ‘reporting entity’ concept defined in the Australian Accounting Standards.
Tier 2 review requirements
The financial statements must be reviewed by an independent accountant, in accordance with Auditing Standards on Review Engagements. The independent accountant’s written report of their review must be submitted, together with the financial statements, to members at the AGM.
The independent accountant must be:
- a member of, and hold a current practising certificate issued by either CPA Australia, the Institute of Chartered Accountants in Australia or Institute of Public Accountants, or
- any other suitably qualified person approved by the Registrar of Incorporated Associations for this purpose, such as a member of the Association of Taxation and Management Accountants holding a current practising certificate.
If the rules of your tier 2 association state that its financial statements must be audited, your association can have its financial statements audited instead (see audit requirements below) and an additional review by an independent accountant is not required.
The review report must be submitted, together with the financial statement, to members at the AGM.
Tier 3 audit requirements
The financial statements must be audited by an independent auditor in accordance with the Australian Auditing Standards. The audit must be submitted, together with the financial statements, to members at the AGM.
The independent auditor must be:
- a registered company auditor or firm, or
- a member of, and hold a current practising certificate issued by either CPA Australia, the Institute of Chartered Accountants in Australia or Institute of Public Accountants, or
- any other suitably qualified person approved by the Registrar of Incorporated Associations for this purpose, such as a member of the Association of Taxation and Management Accountants holding a current practising certificate.
The independent auditor must not be:
- a member of the association’s committee
- an employer or an employee of a member of the committee
- a member of the same partnership as a member of the committee
- an employee of the association.
Sample audit reports
Professionals reviewing and auditing incorporated associations must have a current practising certificate
These are also known as Public Practice Certificates or Certificates of Public Practice.
Current practising certificates are issued by accounting professional bodies and show that an independent accountant or auditor can follow current accounting standards and practices.
Anyone wishing to review or audit the financial statements of incorporated associations must hold a current practising certificate. This ensures that associations are not placed at risk from changes in accounting requirements. For more information, visit the website of either CPA Australia, Institute of Chartered Accountants in Australia or Institute of Public Accountants.
To avoid any unnecessary processing delay when submitted as part of an annual statement to Consumer Affairs Victoria, we recommend that independent accountants or auditors state in their report:
- their professional qualification, and
- the business name they operate under.
To access the Australian Auditing Standards, including the Auditing Standards on Review Engagements, visit the Auditing and Assurance Standards Board website.
Removing an independent auditor
Your association can only remove its auditor by a resolution at a general meeting. You must give at least two months’ advance notice of the resolution to all members, the auditor and Consumer Affairs Victoria.
For more information on general meetings, view Incorporated association meetings.
Deductible gift recipient status
The Australian Taxation Office (ATO) and Australian Charities and Not-for-profits Commission (ACNC) are responsible for the administration of deductible gift recipient (DGR) status. An incorporated association with DGR status is entitled to receive donations that are deductible from the donor's income tax. This means when a donor makes a gift or contribution to a DGR endorsed charity, they may be able to claim a tax deduction.
Incorporated associations may apply to the ATO for DGR status. Unless an exception applies, the incorporated association will need to be a registered charity with the ACNC to receive DGR status. See more information on how to apply for DGR endorsement on the ACNC website.
When seeking DGR status, the incorporated association will need to ensure that the governing documents include a suitable DGR revocation clause and provide the details of the clause in its application for DGR. This clause ensures that, on winding up, any surplus assets will be transferred to another DGR, with similar objects which is charitable at law.
The new model rules do not contain a DGR revocation clause. Incorporated associations seeking to include the DGR revocation clause in their rules can do so by a vote on a special resolution for the change to the rules and then apply for approval of that change with Consumer Affairs Victoria within 28 days of the special resolution being passed. See examples of a suitable DGR revocation clause on the ATO website.
You must provide a copy of the notice of the special resolution stating the change, copy of the rules clearly showing the change and make payment of the relevant fee online. See more information on the fees and forms.