Incorporated Societies Act 2022 – Reporting and Audit Requirements

As mentioned in our February article, the new Incorporated Societies Act 2022 (2022 Act) came fully into force on 5 October 2023.

All incorporated societies currently registered under the Incorporated Societies Act 1908 (1908 Act) will need to reregister under the 2022 Act by April 2026 to remain an incorporated society.

The 2022 Act requires all incorporated societies to prepare and register financial reports annually. The required reporting framework that must be complied with will depend on an incorporated society’s size.

Financial Reporting Requirements

Small societies1 can choose to prepare either:

  1. GAAP compliant financial statements (effectively the XRB’s Tier 1, Tier 2 and Tier 3 PBE Accounting Requirements),

  2. a non-GAAP standard that applies under the 2022 Act (effectively the XRB’s Tier 4 PBE Accounting Requirements); or

  3. minimum requirements as set out in section 104 of the 2022 Act.

All larger incorporated societies (i.e., those that are not small) are required to apply the XRBs PBE Accounting Requirements as follows:

  • Specified not-for-profit entities - i.e., those entities having in each of the 2 preceding accounting periods of the entity, the total operating payments of $140,000 or more - are required to prepare GAAP compliant financial statements (effectively the XRB’s Tier 1, Tier 2 and Tier 3 PBE Accounting Requirements).

  • All other non-small incorporated societies can apply the XRB’s Tier 4 PBE Accounting Requirements.

 
Audit Requirements

Audit requirements also depend on an incorporated society’s size, but it should be noted that the size limits differ to the reporting requirement size limits above.

The 2022 Act requires that an incorporated society must have its financial statements audited if:
  1. it is not a charitable entity; and
  2. in each of the 2 preceding accounting periods of the society, the total operating expenditure of the incorporated society and all entities it controls (if any) are $3 million or more.
Incorporated societies that are charitable entities (i.e., those that are also registered under the Charities Act 2005) are required to follow the audit and review requirements contained in that Act.

Under the Charities Act 2005, as registered charity must be audited if it is defined as large in that Act, and if the registered charity is a medium sized entity, it must be either reviewed or audited.

Under the Charities Act 2005:
  • Large is defined as having in each of the 2 preceding accounting periods of the entity, total operating expenditure of the entity and all entities it controls (if any) of $1.1 million or more.
  • Medium size is defined as having in each of the 2 preceding accounting periods of the entity, total operating expenditure of the entity and all entities it controls (if any) of between $550,000 and $1.1 million.

For more on the requirements under the 2022 Act please refer to our April 2022 ,  September 2023 and February 2024 articles.


For more on the above, please contact your local BDO representative.
 
 

1 A small society is one that has:
(i) in each of the 2 preceding accounting periods of the society, the total operating payments of the society are less than $50,000; and
(ii) as at the balance date of each of the 2 preceding accounting periods, the total current assets of the society are less than $50,000; and
(iii) at the balance date of the accounting period, the society is not an entity described in section LD 3(2) of the Income Tax Act 2007 (a donee organisation).