6.2 Financial Accountability Requirements

Funded organisations are expected to advise the department about their financial status, to assure the department that they are using the funding in an appropriate manner and to ensure service sustainability.

The standard financial reporting forms are contained in Schedule 5, Financial Accountability Requirements (FARS) of the standard service agreement and they are also a condition of funding.

Changes to financial accountability requirements

Organisations funded via service agreements are required to comply with the new Australian Equivalents to International Financial Reporting standards (AIFRS), which came into effect from the commencement of 2005.

As a result of these changes the FAR template (in particular the Financial and Cash Indicator Statements) has been changed to align with the new AIFRS in accord with expert accounting advice.

The new FAR template has been designed to use the same financial reporting categories as most annual financial reports to minimise the additional time required to prepare unique reports for departmental reporting purposes.

Under certain circumstances organisations may be able to submit their audited financial statements in lieu of a FIS provided that:

• Reports are submitted within required timelines; and
• Information required for the FIS which is not included in the audited financial report, is either disclosed separately in the annual accounts or included in a cover letter.

Please contact your PASA to discuss this option.

Information about the AIFRS can be found on the Australian Accounting Standards Board’s website at www.aasb.com.au/index.html (external link).

FAR requirements for organisation type

The FARs requirement for a particular organisation will depend on the:

• organisation type
• service agreement type
• whether the organisation is a company or required by other legislation to produce audited annual financial statements.

Table 5 shows the major types of organisations, the relevant legislation and the nature of the requirement to produce financial statements.

Table 5 Requirement to produce financial statements by organisation type

Copies of the relevant legislation can be obtained online at:

• http://www.dms.dpc.vic.gov.au (external link)
• http://www.lawsearch.gov.au (external link)
• http://www.lawlex.com.au (external link)
• For information about associations, cooperatives and limited partnerships registered in Victoria, search the Victorian Names Register on Consumer Affairs Victoria's website at http://www.consumer.vic.gov.au (external link)
• For information about Incorporated Aboriginal Associations, cooperatives or groups, search the Office of the Registrar of Aboriginal Corporations website at http://www.orac.gov.au (external link)
• For information about companies registered in Australia, search the National Names Index on the Australian Securities and Investment Commission website at http://www.asic.gov.au/easylodge (external link)
• For information about friendly societies registered in Australia, search the Australian Prudential Regulation Authority website at http://www.apra.gov.au/friendly/FriendlyList.cfm (external link).
• For information about the incorporation status of bodies corporate formed by individual Acts of Parliament, refer to the applicable Acts on the Victorian Legislation and Parliamentary Documents website at http://www.dms.dpc.vic.gov.au or the Australasian Legal Information Institute website under Victorian Consolidated Acts at http://www.austlii.edu.au. (external link). Alternatively, use an internet search engine, such as Google (external link).

Table 6 Policy summary: financial accountability and reporting requirements

Annual FAR (Due 1 October of the following year)

Form	Purpose	Required from these organisations
Organisation Certification (excel - 50.0 kb) (download help)	To certify: that the annual statements have been prepared as required by the department compliance with the conditions of the service agreement	Mandatory for all agencies
Annual Report	Also for monitoring and information purposes	Mandatory for all organisations that produce annual financial statements
Annual Financial Indicators Statement (excel - 49.5 kb) (download help)	To provide information for the year on the total operations of the organisation to assist the department in monitoring an organisation's stability	Mandatory for all companies and other types of organisations that are required to produce audited annual financial statements
Auditor's Statement (excel - 43.5 kb) (download help)	To provide reasonable assurance from an independent body that the statements submitted have been prepared in a true and fair manner (covers the Financial Acquittal Statement and the Annual Financial Indicators Statement, where it is requested	Mandatory for organisations that are required to produce audited annual financial statements Not for Public Bodies
Annual Cash Indicators Statement (excel - 43.5 kb) (download help)	To provide information for the year on the total operations of the organisation to assist the department in monitoring an organisation's stability	Mandatory for organisations that are not required to produce an Annual Financial Indicator Statement

Interim FAR (Due 16 Nov; 15 Feb; 16 May)

Form	Purpose	Required from these organisations
Interim Financial (excel - 46.5 kb) (download help) or Cash Indicators Statement (excel - 44.0 kb) (download help)	To provide information for a quarter or half of the year on the total operations of the organisation to assist the department to monitor an organisation's stability	At the discretion of the lead region or division

Note: Public bodies (as defined under the Audit Act 1994), which are required to report to a department (State or Commonwealth) other than the Department of Human Services, are not required to obtain an auditor’s opinion. This exclusion applies principally to local government authorities and government-owned tertiary institutions.

FARs for companies and organisations that prepare audited annual financial statements

For this category of agencies, the FARs include:

• Organisation Certificate - Mandatory for all agencies
• Annual Report - All relevant agencies except those providing only children's services.
• Audit Report - Note: Local government and TAFE agencies are exempted
• Annual Financial Indicators Statement (FIS) - Note: Local government and TAFE agencies are exempted
• Interim Financial Indicators Statement and Interim Financial Indicators Certificate - These requirements are at the discretion of the lead region or division.

Note: Under certain circumstances organisations may be able to submit their audited financial statements in lieu of a FIS. Please contact your PASA to discuss this option.

FARs for organisations not required to prepare audited annual financial statements

There have been some changes made to the FARs for organisations that are not required to prepare audited annual financial statements. The major change is the use of the Cash Indicators Statement (CIS) to replace the FIS for this group of organisations.

Organisations must accurately complete and provide the department with an:

• annual Cash Indicators Statement (CIS)
• organisation certification.