Accounting for Australian Charities

From Data Entry to Board Reporting (Step-by-Step)

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1. Transaction Capture (Data Entry)

All financial activity is first recorded in the charity’s accounting system.

This includes:

• Donations and grants received

• Membership fees

• Program and fundraising income

• Supplier invoices and bills

• Payroll, superannuation, and reimbursements

Transactions are supported by source documents such as receipts, invoices, bank statements, and grant agreements.

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2. Coding and Classification

Each transaction is coded to the correct:

• Account (income, expense, asset, liability, equity)

• Program or cost centre

• Restricted or unrestricted fund (if applicable)

This ensures funds are used in line with donor restrictions and charity purposes.

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3. Bank Reconciliation

At least monthly, bank accounts are reconciled to accounting records to:

• Confirm all transactions are recorded

• Identify errors, omissions, or unusual activity

• Maintain strong financial controls

This step is critical for fraud prevention and accuracy.

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4. Payroll and Compliance Processing

Payroll is processed in line with Australian requirements:

• PAYG withholding

• Superannuation guarantee

• Single Touch Payroll (STP) reporting

Other statutory obligations may include:

• GST (if registered)

• Fringe Benefits Tax (FBT) concessions

• Grant acquittal reporting

 

5. Review and Adjustments

Before reporting, management reviews the accounts and processes:

• Accruals and prepayments

• Depreciation of assets

• Grant income recognition

• Adjustments for errors or timing differences

This ensures the accounts reflect the true financial position.

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6. Management Reporting

Internal financial reports are prepared for management, typically monthly or quarterly:

• Statement of Profit or Loss (income and expenditure)

• Balance Sheet (financial position)

• Cash flow summary

• Budget vs actual analysis

These reports support operational decision-making.

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7. Board Reporting

Clear, high-level financial reports are prepared for the Board:

• Financial statements in plain language

• Key financial risks and trends

• Cash reserves and sustainability outlook

• Compliance confirmation (ACNC/ATO obligations met)

Boards focus on governance, oversight, and strategic financial health rather than day-to-day transactions.

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8. Year-End Financial Statements

At year end, formal financial statements are prepared:

• Statement of Profit or Loss

• Balance Sheet

• Cash Flow Statement

• Notes to the accounts

These are prepared in accordance with Australian Accounting Standards and ACNC reporting requirements.

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9. Audit or Review (If Required)

Medium and large charities must have their financial statements:

• Reviewed or audited by an independent professional

This provides assurance to members, donors, regulators, and the public.

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10. ACNC and ATO Reporting

Final obligations include:

• Annual Information Statement (AIS) to the ACNC

• Lodgement of financial statements (if required)

• Ongoing ATO compliance for tax concessions and DGR status

Once lodged, information appears on the ACNC Charity Register.

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