By Megan Breen

High-quality reporting is increasingly important within the not-for-profit (NFP) and charities sector, as resource providers pay particular attention to both non-financial and financial information in deciding where to direct their support.

To help organisations, CA ANZ has recently published the seventh edition of its Enhancing Not-for-Profit and Charity Reporting guide. It contains reporting guidance for NFPs and charities in both Australia and New Zealand, with recommendations, examples and checklists.

Attracting financial and in-kind support is crucial for NFPs and charities to continue operating sustainably. The guide sets out how relevant and engaging reporting can help tell an organisation’s whole story – highlighting why they exist, their aims and the effectiveness of their impact.

Enhancing performance reporting

Funders and donors are demanding more than just reporting on traditional financial metrics to help them decide where to place their money, goods or time.

“Stakeholders want to know that a NFP or charity is financially viable, but that alone is not enough anymore. A different angle is also required, which is where sustainability reporting or impact reporting is becoming increasingly important,” says Aletta Boshoff FCA, partner and national leader, IFRS Advisory, at BDO in Melbourne."

“There is a lot of pressure on NFPs – they are competing against each other to attract funds, which means they need to be able to show why they can make a difference with the money that is being provided.”

“Not-for-profits… need to be able to show why they can make a difference with the money that is being provided.”

A contributor to the guide’s Part A: Enhancing performance reporting, Boshoff says being able to demonstrate the impact of outcomes is essential, and the publication outlines how best to do this.

Through practical examples and checklists, it assists users to tackle some complex questions and is a valuable tool for NFPs who are reporting on performance for the first time, as well as those who have previously done so.

“Sustainability reporting, or environmental, social and governance (ESG) reporting is growing phenomenally and this guide is a good resource whether you are just starting or whether you are looking to further improve on how you demonstrate the difference you are making,” says Boshoff.

Improving financial reporting

Although financial reporting is largely dictated by legislation and accounting standards, many opportunities exist to enhance the clarity and usefulness of financial reports.

The guide’s Part B: Enhancing financial reporting section is offered as two separate editions, one for Australia and one for New Zealand, with each focusing on the financial reporting framework in the relevant jurisdiction.

Contributor Kerry Hicks FCA, Pitcher Partners’ technical standards director, explains that Australian reporting requirements have been modified since the previous edition, and NFPs need to be aware of the changes in order to apply them to the next financial report.

“The guide illustrates the latest changes to financial reporting for those NFPs preparing general purpose financial statements,” she says. “Instead of preparing financial statements that comply with the reduced disclosure requirements they will need to prepare accounts that comply with the AASB’s new simplified disclosure standard (AASB 1060).”

Picture: Kerry Hicks FCA.

“The guide illustrates the latest changes to financial reporting for those NFPs preparing general purpose financial statements.”

How that affects each specific entity may be different, so NFPs should use the guidance provided and apply the changes that are relevant to their entity.

Hicks adds that the illustrative financial statements provided in the revised publication may be particularly useful.

“Entities should first compare their previous financial statements to the illustrative financial statements in this guide. By doing that comparison, they can delete the parts they no longer need to do, and then they can highlight the new areas they need to look at.

“If there are new areas for them, they will need to ensure they have systems in place to collate whatever additional information they might need to meet those new requirements.”

How the guide helps in NZ

Jamie Cattell CA, chair of the Charities and NFP Segment Advisory Committee and contributor to the New Zealand edition of Part B, says while New Zealand has not had any significant changes to reporting requirements, the guide’s principles and recommendations remain relevant to a lot of NFPs and charities.

“The guide is really asking the reader a set of questions about each part of the reporting process,” he explains.

Picture: Jamie Cattell CA.

“The guide is really asking the reader a set of questions about each part of the reporting process.”

“It helps you know whether you are reporting all of the aspects that you are required to report, as well as anything else you should take into account when you are deciding what other information to include.”

He notes that entities have a lot of freedom to choose how to present information to most effectively tell the story about what they do.

“The real value of this guide is to encourage people to explore the space in reporting between what the requirements say you have to do and what you would do if you could prepare a specific report for every user.”

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