The following exemptions, by way of Class orders, have been authorised for the preparation and auditing of financial statements for Tier 1 incorporated associations:
Qualifications of auditor
An auditor of a Tier 1 association does not need to be a registered company auditor, provided that the person appointed is:
- a member of The Institute of Chartered Accountants in Australia (ICAA), or a member of CPA Australia, or a member of the Institute of Public Accountants (IPA, formerly the National Institute of Accountants), and holds a public practice certificate issued by one or more of these bodies, or
- the Auditor-General of the Commonwealth of Australia or of a State or Territory.
- For an audit carried out by a non-registered company auditor, the auditor's report must record whether the auditor is a member of The ICAA, CPA Australia or the IPA and holds a public practice certificate issued by one of those bodies.
- More information is available in the Class order 10/01 Exemption (PDF, 198.42 KB) relating to a registered company auditor.
An auditor of a Tier 1 association is exempt from the independence requirements of section 52(2) of the Associations Incorporation Act 2009 (the Act) provided that:
- the audit of the association is carried out in accordance with the code of conduct relating to independence in APES 110 Code of Ethics for Professional Accountants issued by the Accounting Professional and Ethics Standards Board, and
- the auditor's report for the financial statements for the association includes an auditor's independence declaration as follows:
- ‘as auditor for the audit of ..... (name of association) for the financial year ended ..... (date), I declare that, to the best of my knowledge and belief, there have been no contraventions of the code of conduct relating to independence in APES 110 Code of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board’.
More information is available in the Class order 10/02 Auditor independence (PDF, 190.04 KB).
Financial reporting requirements
An association can be exempt from the financial reporting requirements of section 43(2) of the Act in relation to application of Australian Accounting Standards where total revenue reported in the income and expenditure statement for a financial year is less than $2,000,000.
However, in applying this exemption, an association must meet a minimum range of requirements in preparing the financial statements. Details of these requirements are contained in Class order 11/01 Financial reporting requirements (PDF, 291.77 KB).
Generally, Fair Trading will not exempt a Tier 1 association from the financial statement preparation requirements of Class order 11/01.
Tier 1 associations - application for exemption from audit
Section 53 of the Act provides that an individual association may be exempted from the requirements of the Act in relation to the preparation and audit of financial statements.
In very limited circumstances, applications for audit exemption will be considered based on, but not limited to, the following criteria:
- awareness of Class order 10/01 permitting audit by a member of ICAA, CPA Australia or IPA who holds a public practice certificate
- any other requirement for audit e.g. audit provision in constitution or requirement of other legislation or regulatory agency
- level and nature of transactions and accounts, taking into account variance over Tier 1 thresholds
- quality of financial statements preparation. In particular, recognition and measurement of transactions in accordance with Australian Accounting Standards Board and whether requirements of at least Class order 11/01 have been met
- nature of association and its financial transactions
- whether in receipt of grant funding, amount of grant funding and requirement for audit by funding agency
- proportion of assets held as liquid assets
- level of external creditors who may rely on the financial statements
- composition of association membership.
Applications must be in writing and accompanied by the set fee.
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