Is your incorporated society ready for the new reporting requirements?

Are you involved with an incorporated society? If so, it needs to be registered under the Incorporated Societies Act 2022, if it hasn’t already.

Time to read: 3 mins

The Act came into force on 5 October 2023 and societies registered under the Incorporated Societies Act 1908 will need to reregister under the 2022 Act to retain their incorporated status. Societies have until 5 April 2026 to apply.

Until then, they will continue to operate under the 1908 Act. A summary of key changes arising from the 2022 Act and how they may impact your society is available here. Note that all records filed in accordance with either Act are publicly available on the Incorporated Societies Register.

New financial reporting requirements

The 2022 Act introduces new financial reporting requirements for incorporated societies.

Preparing financial statements is a key way that societies report back to members, creating trust and keeping them up to date with what is happening with their society and its finances. Under the 1908 Act, societies were required to prepare financial statements, however there were few requirements around the form and content of those statements.

The 2022 Act determines who has to prepare financial statements and which accounting standards apply. The Act requires:

  • Every society to prepare annual financial statements and file with the Registrar within six months of their balance date.
  • All societies (except those that are “small”) to prepare these statements in accordance with the standards issued by the External Reporting Board (XRB).
  • Financial statements of certain societies to be audited, as prescribed by the regulations.

What is a ‘small society’?

A small society is defined using the following criteria in section 103 of the 2022 Act:

  • Less than $50,000 spent in each of the two preceding financial years.
  • Current assets were $50,000 or less at the end of the two preceding financial years; and
  • Not a “donee organisation” for tax purposes. 

A small society may choose to follow the XRB accounting standards or the minimum requirements prescribed by the 2022 Act. The financial statements prepared for you by your professional accounting provider (such as Baker Tilly Staples Rodway) are likely to meet the minimum requirements of the 2022 Act. 

New auditing requirements

Under the 1908 Act, societies that are not registered charities are not required to have their financial statements audited. Under the 2022 Act, all societies that have total operating expenditure of more than $3 million in each of the two preceding years will have to have their financial statements audited.   

What should you do now?

Review the summary of key changes so you are clear on how the 2022 Act is likely to impact your society.

Baker Tilly Staples Rodway can assist you and advise whether your financial statements will need to be updated to meet the requirements under the 2022 Act. If changes are required, we can clarify what these changes are and work with you to ensure you are able to comply.

DISCLAIMER No liability is assumed by Baker Tilly Staples Rodway for any losses suffered by any person relying directly or indirectly upon any article within this website. It is recommended that you consult your advisor before acting on this information.

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