Charities where no audit is required no longer required to appoint an auditor
The bill that repealed the rule that allowed 100 members to requisition a general meeting, and which has since received Royal Assent, also included the removal of a requirement for corporations to appoint an auditor despite not being required to be audited because they either have revenue that is lower than the threshold for requiring audit or review, or are otherwise exempt. This is a welcome relief for many charities that are companies limited by guarantee.
This had been a technical issue that occurred due to the interaction between the Corporations Act 2001 (Cth) and the Australian Charities and Not-for-Profits Act 2012 (Cth) (the ACNC Act). A number of provisions in the Corporations Act were ‘switched off’ for charities when the Australian Charities and Not-for-profits Commission (ACNC) was established, including the financial reporting requirements. Broadly similar requirements applied under the ACNC Act.
However, despite the ‘switching off’ of these the financial reporting requirements under the Corporations Act, charities that are companies limited by guarantee were still subject to the auditor appointment provisions in the Corporations Act. Due to the fact that the provisions defining those companies limited by guarantee that are not subject to the requirement to conduct an audit or review are slightly different in the Corporations Act and the ACNC Act, some charities that are companies limited by guarantee were still required to appoint an auditor under the Corporations Act, even though they are only required to have a reviewed financial report under the ACNC Act.
The change to the legislation has now ensured that charities that are companies limited by guarantee (of a certain size) have benefited from the same red tape reduction as other non-charitable companies limited by guarantee.