• Reporting for Incorporated Societies to be aligned with other NFPs and Charities
  • Requirements depend on whether OPEX is more or less than $2M per annum
  • Cash flow to be reported by Incorporated Societies with OPEX below $2M, along with a new statement of service delivery
  • Start planning now to provide the information you will need, ahead of the new reporting requirements which come into effect in 2025.

The Incorporated Societies Act 2022 has brought about a number of changes that will impact Incorporated Societies. One of the changes is how Incorporated Societies prepare their annual financial statements. New rules will apply bringing the rules governing the preparation of financial statements in line with other not-for-profit public benefit entities such as charities.

For Incorporated Societies that do have charitable status and those which have adopted Generally Accepted Accounting Practice (GAAP) for reporting, there are no changes to the rules governing the preparation of financial statements.

For all other Incorporated Societies, the nature of the changes will depend on the size of the Incorporated Society as measured by annual operating expenses (OPEX). Changes come into effect on 1st December 2025 – at the latest. Organisations can, of course, adopt the new rules earlier than this date.

For those Incorporated Societies which have OPEX less than $2M the most significant changes are the inclusion of a Statement of Cash Flows in addition to the Profit & Loss and Balance Sheet as well as additional note disclosures using existing financial information. Also the inclusion of a Statement of Service Performance which provides an opportunity to outline the achievements of the Incorporated Society in a qualitative and quantitative manner.

While the Act’s new rules may not impact your Incorporated Society for a few years it is worthwhile preparing for those future changes now – collecting the information that will need to be disclosed in financial statements, and adopting new reporting systems well in advance of the required date. This will save time, money and stress for everyone involved.

For Incorporated Societies with OPEX greater than $2M that have not adopted GAAP the new rules are likely to have a far greater impact.  These organisations will have a far greater level of disclosure as well as far-reaching changes in the way certain transactions are accounted for.

BVO Audit have years of experience helping clients navigate the changes required to meet these new financial accounting and reporting rules. We can help clients of all sizes, every step of the way. We welcome calls to discuss assisting your organisation make these changes as painlessly as possible.

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