New regulations will be put in place by the State Government that aim to reduce the red tape burden for WA’s incorporated associations with financial reporting thresholds to be increased.
The current three-tier system of financial reporting is based on the association’s revenue and is designed to minimise the obligations on small associations while ensuring larger associations are accountable to their members for their financial management.
Revenue bands will be increased as follows:
- Tier 1 – currently less than $250,000, will become less than $500,000.
- Tier 2 – currently $250,000 to $1 million, will become $500,000 to $3 million.
- Tier 3 – currently more than $1 million, will become more than $3 million.
Tier 1 associations need only supply an annual financial statement to members, those in tier 2 must have their financial reports reviewed, while a full audit of financial reports is required for larger associations in tier 3.
The new regulations currently being drafted by Consumer Protection will bring WA in line with the national reporting requirements of the Australian Charities and Not-for-profits Commission (ACNC), providing simplicity, clarity and consistency.
Commissioner for Consumer Protection Gary Newcombe said about 2,000 incorporated associations in WA will benefit from these changes in terms of time savings and lowering the cost of compliance.
“The alignment of state and national regulations will prevent the doubling up of financial reporting obligations, thereby reducing the red tape burden on the sector in WA,” Mr Newcombe said.
“Without these changes, many WA associations would need to comply with two different sets of regulations, so this extra cost burden will now be avoided and comes as welcome news for those working in the sector, many of whom are volunteers.
“We have responded to the feedback from our consultations which have highlighted the need for this consistency and more practical tier levels.
“While the changes set a minimum reporting requirement, members of tier 1 and 2 associations can still choose to impose additional obligations, including a review or audit, if they feel it is necessary.”
More than 20,000 associations are incorporated in WA. A wider review of the Associations Incorporation Act is currently underway.