Document ID: chunk:federal_register_of_legislation:F2022C01110:reg:20:p11
Version: federal_register_of_legislation:F2022C01110
Segment Type: reg
Provision Reference: reg 20 (pt 11/40)
Character Range: 67537–70581

the NFP sector.
BC43            The Board also considered using a modified definition of public accountability in the NFP sector context.  The Board noted the disparate views among constituents about whether such a notion can effectively be modified and used to identify entities falling under different reporting Tiers in the NFP sector.
BC44            The Board noted that some constituents believe that the level of public accountability, for example, for each charity, depends on a number of entity-specific factors, which reduce the usefulness of 'public accountability' as a stand-alone criterion for differential reporting purposes in the NFP sector.  Some constituents argued that the degree of public accountability of a charity has a direct relationship to the following.
(a)                    Sources of funds:  for example, if the sources of funds are public donations (particularly those that are tax deductible by the donor) or government grants, then a high degree of public accountability is expected.  Voluntary labour may be regarded as a form of donation and, therefore, a high degree of public accountability might be expected when significant voluntary labour is involved.  Generally the level of public accountability is high where public funds are involved, such as when community or social activities are carried out on behalf of government.  However, when the source of funds is an individual or a corporation, a much lower degree of public accountability is expected on the basis that the individual or corporation involved can probably access the financial information they need.  A moderate level of public accountability may be envisaged when the sources of funds are grants from foundations or sponsors.
(b)                   Number of stakeholders in the entity:  the wider the spectrum of stakeholders, the higher the expected level of public accountability.
(c)                    Scale of operations and geographical coverage:  generally charities active at the national or international level are seen as being publicly accountable at a high level.
BC45            The Board concluded that a modified definition of public accountability in the NFP private sector context would not provide a robust basis for identifying entities falling under different reporting Tiers since NFP private sector entities, (with the likely exception of smaller member-based entities), are typically seen as having differing degrees of public accountability in the general sense of the term.
BC46            The Board reached a similar conclusion about whether a definition of public accountability could provide a robust basis for identifying NFP public sector entities falling under different reporting Tiers.  This is on the basis that these entities are regarded as publicly accountable in the general sense of the term.

Size Thresholds
BC47            The Board proposed in ITC 12 that NFP entities that prepare general purpose financial statements that exceed nominated size thresholds should be required to apply Tier 1