> Incorporated Associations  > Accounts and audit  > Accounting obligations

On this page

• 1. Checklist
• 2. Prescribed Associations (section 3)
• 3. Gross receipts (section 3)
• 4. Preparation of accounts (section 35)
• 5. Committee's statement (section 35(2)(c))
• 6. Committee's report (section 35(5))
• 7. Accounts and reports to be laid before members
• 8. Annual return (section 36(1))

1. Checklist

The procedure for a prescribed association to enable its accounting obligations to be fulfilled would be as follows:

(a) Accounts are prepared.

(b) Committee's statement is prepared.

(c) Committee's report is prepared.

(d) Accounts with the committee's statement attached are submitted to the auditor.

(e) Auditor's report is furnished to the committee .

(f) All of the above documents are laid before members at the AGM within five months after the end of the financial year.

(g) Annual (periodic) return, accompanied by all of the documents referred to above, is lodged with Consumer and Business Services within six months after the end of the financial year.

Each of these requirements are discussed in more detail below.

2. Prescribed Associations (section 3)

A prescribed association is defined as an incorporated association that had gross receipts in excess of $500,000 per annum in the association's previous financial year.

3. Gross receipts (section 3)

“Gross receipts” is defined as the total amount of receipts including any government grants or subsidies received from local, State or Commonwealth governments. The following money received may be excluded from the calculation of gross receipts:

(a) Subscriptions, membership fees, levies or other fees paid by a member;

(b) Money received as a devise or bequest, ie, by operation of a will; or

(c) Proceeds from the sale of assets which were not originally purchased for resale.

An example of “other fees” which may be excluded from the calculation of gross receipts are those fees paid by a member which are inextricably related to the full benefits of membership.

The following receipts should be included in the calculation of gross receipts:

(a) Those of a commercial nature such as receipts from bar sales; and

(b) Gifts and donations from activities such as appeals to the public from door knocks etc.

(c) Government grants.

4. Preparation of accounts (section 35)

After the end of a financial year (as defined in section 3), a prescribed association must arrange for accounts for the year to be prepared that present fairly the operations of the association. The accounting records must be kept in such a manner to enable this to occur (section 35(1)).
The accounting records must be kept for seven years after the completion of the transactions to which they relate (regulation 8). The accounts (and the committee's statement discussed below) must be submitted to the auditor in sufficient time to enable the auditor to audit and furnish a report on the accounts (section 35(3)).
“Accounts” is defined in section 3 as either:

(a) cash accounts - an account of receipts and payments and a statement of assets and liabilities, or

(b) accrual accounts - an account of income and expenditure and a balance sheet,

Together with such statements, reports and notes, other than auditors' reports, as are attached to and intended to be read with the accounts.

A combination of cash and accrual accounts is not acceptable.

If a profit and loss account is prepared in accordance with accounting standards, in order to comply with the Act, the total income and total expenditure for the period should also be recorded in the account, or notes intended to be read with the account, and (at least) all major items of income and expenditure should also be recorded in, eg. the notes.

5. Committee's statement (section 35(2)(c))

Before the accounts are submitted for audit, they must have a statement by the committee attached to them. It must be made out in accordance with a resolution of the committee and signed by two or more members of the committee and state:

(a) whether or not the accounts present fairly the results of the operations of the association for the financial year and the state of affairs of the association as at the end of the financial year;

(b) whether or not the committee has reasonable grounds to believe that the association will be able to pay its debts as and when they
fall due; and

(c) particulars of any subsidiaries of the association and of any trust of which the association is a trustee.

The committee should make sufficient inquiries before signing the report to satisfy itself that the association has sufficient funds to pay all its debts. If a positive statement cannot be made, the situation should be clearly explained and the committee members should carefully consider whether trading should continue in the context of incurring possible liabilities in relation to the insolvent trading offence (section 49AD).

In relation to an association acting as trustee, it is recommended by Consumer and Business Services that the rules of the association refer to the establishment of the relevant trust and that the functions of the association in its capacity as trustee are enshrined in a deed of trust for that purpose. The periodic return (Form 9) provides for brief particulars of any alterations to any trusts affecting the rules of the association which have not yet been lodged for registration. (Form 9) also provides for the names of subsidiary bodies corporate to be disclosed.

6. Committee's report (section 35(5))

The committee must prepare a separate report on any benefits received directly or indirectly by officers. It must be made out in accordance with a resolution of the committee and signed by two or more members of the committee. Where no benefits exist a report to that effect must still be prepared referring to the provisions of section 35(5) of the Act.

“Officer” includes a person who is a committee member, or the secretary, treasurer or public officer, or a person who acts in such positions, or a person who participates in management. This applies whatever title the person holds and even if the person is not validly appointed or authorised to act in the position. If the committee is accustomed to act in accordance with the directions or instructions of any person, that person is deemed to be an officer of the association. The definition of officer in section 3 should be referred to before commencing the report which must state, in relation to each officer of the association, the:

(a) general nature of any benefits received by the officer, as a result of a contract between the officer and the association;

(b) general nature of any benefits received by a firm of which the officer is a member, or a body corporate in which the officer has a substantial financial interest, as a result of a contract between any of those “related parties” (hereafter referred to as “related parties”) and the association; and

(c) general nature and extent of any payments or other benefits of a pecuniary value received directly or indirectly by the officer from the association.

Some examples of benefits or payments to be reported are:

(d) Any transactions between the association and an officer, or between the association and a related party, for particular services or facilities provided to the association. An example is legal advice provided to the association by a firm of solicitors of which a committee member or other officer is a partner. Disclosure should include whether the service is provided on commercial terms or not.

(e) Any fees paid to committee members in relation to managing the affairs of the association. This may be reported by disclosure in a note to the accounts of the amount received, in a similar manner to disclosure of income of company directors, ie., in bands of $10,000, and by including in the committee's report a cross reference to the particular note. Insubstantial fees paid to committee members as an honorarium need not be reported.

(f) Any remuneration received by officers who are also employees of the association as a result of individual employment contracts with the association. It is not intended that confidentiality should be breached and the specific amount of remuneration received need not be reported. The fixed salary of officers employed under general awards and conditions need not be reported.

(g) Any premiums paid by the association in respect of a contract of insurance with the association, indemnifying an officer against liability for neglect, default, or breach of duty or of trust. These payments constitute an indirect benefit received by an officer.

(h) Any payments made by an insurance company as a result of successful claims in respect of a contract of insurance with the association indemnifying an officer against liability for neglect, default, or breach of duty or of trust, or any payments made by the association in relation to defending any proceedings against an officer.

(i) Any other payments or monetary benefits received by officers, even though not relating to managing the affairs of the association, eg. any fees of a private nature paid by the association to an officer for entry to sporting events. Amounts in payment or reimbursement of out of pocket expenses incurred for the benefit of the association need not be reported.

7. Accounts and reports to be laid before members

Unless the rules do not provide for membership, a prescribed association must hold an annual general meeting within five months after the end of the financial year (section 39(1)). However the first annual general meeting may be held within 18 months after incorporation (section 39(2)).

The accounts of a prescribed association that has members, together with the auditor's report on the accounts, the committee's statement and the committee's report, must be laid before members at the annual general meeting within 5 months after the end of the financial year. If the first annual general meeting is not to be held within this period by operation of section 39(2), the accounts and other documents must still be laid before members within 5 months after the end of the financial year.

8. Annual return (section 36(1))

An annual (periodic) return of a prescribed association (Regulation 9, (Form 9), must be lodged with the prescribed fee with Consumer and Business Services, Level 3, Chesser House, 91-97 Grenfell Street, telephone 131 882, within six months after the end of each of the association's financial years. It must be accompanied by a copy of the accounts, the auditor's report, the committee's statement, and the committee's report.

• Home

• Media releases

• Popular pages
  • Business advice
  • Consumers advice
  • Youth advice
  • Online services

• Languages

• A-Z Search

• Help