Why Charities and Not for Profits Need Audits Too

Many people assume audits are only for big companies chasing profit. That is not true. If your organisation is registered with the Australian Charities and Not for profits Commission, or ACNC, your reporting requirements often depend on your annual revenue.

Small charities usually have lighter obligations. Medium charities generally need a review at minimum. Large charities are usually required to have a full financial audit each year. On top of that, many grant bodies and government funders ask for an independent audit before they will keep funding you, regardless of your size.

So even if the law does not force your hand, your funders often will.

What Makes These Audits Different

A charity audit is not just a smaller version of a company audit. There are a few things that make it its own thing entirely.

Restricted funding needs to be tracked properly. Many charities receive grants or donations tied to a specific purpose. An auditor needs to check that money given for one program was actually spent on that program, not quietly moved somewhere else.

Volunteer involvement changes how controls work. Businesses usually have paid staff following set processes. Charities often rely on volunteers, which can make internal controls harder to keep consistent. This is often where risk consulting adds real value, helping boards spot where volunteer led processes might be exposing them to risk. A good auditor understands this reality instead of applying rules built for a corporate office.

Public trust is the real currency. A company that gets a bad audit result might lose an investor. A charity that gets a bad result can lose donors, members, and its reputation in the community almost overnight. The stakes feel different, even if the process looks similar on paper.

Reporting to multiple bodies at once. Charities often need to satisfy the ACNC, state fundraising regulators, and specific funding bodies all at the same time, each with slightly different expectations.

The Real Benefits Beyond Compliance

A proper audit does more than keep the ACNC happy. For a not for profit, it can:

• Reassure donors and members that funds are being used the right way
• Strengthen your case when applying for new grants or funding
• Catch small process gaps before they turn into bigger governance issues
• Give your board confidence that oversight is actually working
• Build long term trust with the community you serve

Boards that treat their audit as a genuine check up, rather than a box to tick once a year, tend to run stronger, more trusted organisations over time.

Common Mistakes We See

A few issues come up again and again with not for profits and charities.

Poor separation of duties is common, especially in smaller organisations where one or two people handle most of the finances. This is exactly the kind of gap that internal controls testing is designed to catch. Restricted and unrestricted funds sometimes get mixed together without anyone noticing until it becomes a real problem. Financial reporting is occasionally left until the last minute, which increases the risk of errors and makes the whole audit process more stressful than it needs to be.

None of these are unusual, and none of them are impossible to fix. The key is having someone independent take a proper look and flag them early.

How Assurance and Audit Can Help

We understand the pressure boards and finance staff are under in the not for profit sector. Our approach is practical and straightforward. Our team takes the time to understand your funding sources, your reporting obligations, and your internal setup before we start, so the audit process feels less like an interruption and more like a useful check in. You can read more about who we are and the sectors we work with.

If your organisation needs a review or full audit this year, or if you simply want to talk through what your obligations actually are, reach out to our team. You can call us on 0408 644 791 or email a.loots@assuranceandaudit.com.au, and we will walk you through the next steps in plain language, no jargon required.

Get Started Today

Your board, your donors, and your funders deserve confidence that your organisation is being run the right way. Get in touch with Assurance and Audit today to discuss your charity or not for profit audit and let our team help you stay compliant, transparent, and ready for whatever comes next. 

Frequently Asked Questions

1. Does every charity in Australia need a full audit?

Not always. It depends on your annual revenue and your ACNC classification. Small charities often only need a basic report, while medium and large charities usually need a review or full audit.

2. What happens if a charity does not meet its audit requirements?

This can affect your ACNC registration, your ability to receive grants, and in some cases your charity tax status. It is always better to stay on top of requirements than deal with the fallout later.

3. How is a charity audit different from a business audit?

Charity audits pay close attention to restricted funding, donor conditions, and public accountability, on top of the usual financial checks a business audit covers.

4. How long does a not for profit audit usually take?

It depends on the size of the organisation and how organised the records are, but most small to medium charities can expect the process to take a few weeks.

5. Can Assurance and Audit help with grant funding audits as well as annual audits?

Yes. We regularly help organisations meet the specific audit conditions attached to grant funding, alongside their standard annual reporting requirements.