New accounting rules land after six-year wait

Posted on 24 Jun 2026

By Matthew Schulz, journalist, Community Directors

Tax — The changes are aimed at making reporting requirements "clearer and less resource-intensive for smaller entities." Pic: Shutterstock

A long-awaited accounting standard aimed at simplifying financial work for smaller not-for-profits has been released after more than six years in development.

The Australian Accounting Standards Board (AASB) released the new “Tier 3” rules last week, completing a multi-year reform program that began in 2019.

The new standard, officially termed AASB 1061 General Purpose Financial Statements – Not-for-Profit Private Sector Tier 3 Entities, is aimed at medium-sized charities, incorporated associations, co-operatives and other private sector not-for-profits. Tier 3 refers to organisations with revenues between $500,000 and $3 million, complementing existing Tier 1 and Tier 2 standards.

Kristen Haines, national head of technical accounting and sustainability reporting at Moore Australia, welcomed the release but noted that implementation of the changes was still reliant on the charities regulator.

"I think it is great news that the standard has finally been issued, as charities have been waiting for it for a long time," Haines said. "It is now time for people to start engaging with the standard, analysing the impacts and determining if and when you will migrate to the new requirements, subject to regulatory direction."

The release includes a companion amendment to limit not-for-profits from using special purpose financial statements, which are informal financial reports that sit outside standard frameworks, and which have been blamed by the AASB for inconsistent financial reporting.

About a third of NFPs currently rely on the workaround involving special purpose financial statements.

“I think it is great news that the standard has finally been issued, as charities have been waiting for it for a long time.”

Kristen Haines, national head of technical accounting and sustainability reporting, Moore Australia

AASB chair Dr Keith Kendall said the board had worked closely with sector stakeholders to make reporting requirements "clearer and less resource-intensive for smaller entities," in response to consistent feedback that complexity diverts effort and adds cost.

One of the most significant changes under the standard is that income recognition will be simplified using a "common understanding" test to replace the existing performance obligations assessment, leases will come off the balance sheet, and consolidation of related entities will become optional.

The AASB has also released a separate fact sheet directed specifically at regulators, spelling out their responsibility to decide which entities are required or permitted to apply the standard – a notable step given the board's own acknowledgement that regulatory clarity is still needed.

As Community Directors reported when the standard was approved last month, the rollout still requires regulators’ formal advice on which organisations can apply it. The Australian Charities and Not-for-profits Commission (ACNC) previously said it would wait until after publication of the standard to "analyse and assess the impact of the reforms”, which may have included introducing a uniform Tier 3 threshold. This week, however, a spokesperson said that its next steps had not been determined.

Haines earlier warned that early adoption carried real risk while regulators remained silent. "Until regulators decide their rules, entities are taking a gamble," she said.

Mandatory application of the standard begins on 1 July 2029.