An association is a Tier 1 association if:
- the association’s total revenue as recorded in the income and expenditure statement (i.e. gross receipts) for a financial year (excluding GST) is more than $250,000, or
- its current assets are more than $500,000.
Refers to assets (other than real property or assets that are capable of depreciation) held by the association as at the end of the association’s last financial year. It includes amounts held in financial institutions, stocks and debentures.
What records have to be kept?
Associations must keep records that correctly record and explain their financial transactions and financial position.
Tier 1 associations must ensure these financial records are sufficient to enable financial statements to be prepared in accordance with the Australian Accounting Standards.
Preparing financial statements
The committee must ensure the financial statements for a Tier 1 association, and any trust for which the association acts as a trustee, are prepared and audited as soon as possible after the end of the association's financial year, for submission to the annual general meeting (AGM).
The financial statements must be prepared in accordance with Australian Accounting Standards and must include:
- details of any mortgages, charges and other securities affecting any property owned by the association, and
- a separate income and expenditure statement and balance sheet for each trust for which the association is the trustee.
Tier 1 associations with total revenue of less than $2 million in a financial year are not required to fully comply with Australian Accounting Standards. However, the financial statements must satisfy a particular set of requirements set out in Class Order 11/01 financial reporting requirements (PDF, 291.77 KB) and must contain:
- a statement of income and expenditure that sets out appropriately classified individual sources of income and items of expenditure incurred in the operation of the association
- a balance sheet at the end of the financial year, that sets out current and non-current assets and liabilities
- statements of movements in the equity section of the balance sheet, being movements in retained surplus or accumulated loss and movements in any reserves
- a statement of accounting policies appropriate for the association’s transactions
- details of any mortgages, charges and other securities affecting any property owned by the association
- a separate income and expenditure statement and balance sheet for each trust for which the association is trustee
- a consolidated statement of income and expenditure and a consolidated balance sheet, which consolidates its investment in any subsidiaries, as defined by Australian Accounting Standards Board AASB 127, except for any trusts for which it acts a trustee.
Tier 1 associations not covered by the Class order 11/01 must prepare full financial statements, including a statement of cash flows and all notes to the financial accounts in accordance with Australian Accounting Standards.
Auditing of a Tier 1 association’s financial statements
The financial statements must be audited in time for submission to the association’s AGM. The auditor’s report must:
- be prepared in accordance with the Australian Auditing Standards. Visit the Audit and reporting exemptions page for details of current exemptions, and
- state whether the association has kept the necessary financial records to enable financial statements to be prepared in accordance with Australian Accounting Standards.
For more information on the Australian Auditing Standards, visit the Auditing and Assurance Standards Board website at www.auasb.gov.au.
Who can audit a Tier 1 association’s financial statements?
An audit can be carried out by any of the following:
- a registered company auditor, or
- a member, who holds a current public practice certificate, of the Institute of Chartered Accountants Australia and New Zealand, CPA Australia or the Institute of Public Accountants (formerly the National Institute of Accountants).
An audit may not be carried out by any person who, within the last 2 years, is or has been:
- a member of the association, or
- an employee or provider of professional services to the association (other than audit services), a committee member or its public officer
unless the auditor satisfies the requirements of Class Order 10/2 Exemption relating to auditor independence (PDF, 190.04 KB).
Go to the Audit and reporting exemptions for more information on auditor qualifications.
Can an association be exempted from the audit requirement?
In limited circumstances an association, or any class of associations, may be exempted from the requirement to obtain an audit under the Associations Incorporation Act 2009 (the Act).
Go to the Audit and reporting exemptions page for information on applying for an exemption from audit.
Can an association be directed to conduct an audit?
NSW Fair Trading may direct any association to conduct an audit of its financial records and request an auditor’s report within a specified period, regardless of whether a Tier 1 or Tier 2 association or any previous audit.
What financial documents need to be presented to members at the AGM?
The association’s committee must submit the following documents to the association’s AGM:
- the financial statements for the previous financial year, and
- the auditor’s report for those statements.
What do we lodge with Fair Trading?
A Tier 1 association must lodge the following documents with Fair Trading within 1 month of the AGM, but no later than 7 months after the end of the association’s financial year:
- an Annual summary of financial affairs – Tier 1 (form A12 – T1) for the financial year
- the audited financial statements for the association and any trusts it administers
- a signed and dated auditor's report
- a copy of the terms of any resolution passed at the AGM, concerning the financial statements and the auditor's report
- payment of the set lodgement fee and late fee if applicable.
Associations should obtain a copy of the Annual summary of financial affairs – Tier 1 (form A12 – T1) from the Associations forms page.
An Annual summary of financial affairs is not considered to be lodged until all required documents and set fees have been received.
From 1 October 2018, most incorporated associations that are also registered with the Australian Charities and Not-for-profits Commission (ACNC) will only need to submit annual financial reports to the ACNC. The ACNC will share the information with NSW Fair Trading. However, if an Annual summary of financial affairs is outstanding, it must still be lodged with Fair Trading.
More information is available on the Reporting changes for associations registered as charities with ACNC page.
How do we lodge financial reports and other documents?
The Annual summary of financial affairs, reports and the prescribed payment can be lodged:
- by email to firstname.lastname@example.org together with a completed credit card payment form
- by mail to Registry Services, PO Box 22, Bathurst NSW 2795
- in person at any Service NSW Centre.
What if we need more time?
An association should apply for an extension of time if it cannot hold its annual general meeting within 6 months after the end of its financial year or lodge its Annual summary of financial affairs or reports by the due date. This can be done by lodging an Application for extension of time for holding annual general meeting or lodging annual summary of financial affairs (form A11).
The form and payment of the applicable fee should be lodged as soon as possible after the association becomes aware that it will be unable to comply with its obligations under the Act.
Need more information?
PO Box 22
Bathurst NSW 2795
Tel: 02 6333 1400
Free Call: 1800 502 042