With tighter budgets, changing funding conditions and growing financial pressures, understanding the numbers is essential for not-for-profit (NFP) boards. But receiving funding is only the beginning. When grants come with conditions, your NFP needs a clear process for tracking how funds are used and reporting back to funders.
Financial reports show where money is coming from, where it is going and whether activities are financially sustainable. Used well, they support better decisions, not simply reporting obligations.
This is also an area of change. In June 2026, the Australian Accounting Standards Board (AASB) issued AASB 1061, a new Tier 3 Standard designed to simplify general purpose financial reporting for eligible smaller private-sector NFPs while focusing on information that matters to users. It applies to annual reporting periods beginning on or after 1 July 2029, with early application permitted.
What financial reports should an NFP board review?
At a minimum, boards should regularly review:
- Profit and loss statement: Revenue, expenses and the resulting surplus or deficit.
- Balance sheet: Assets, liabilities and net assets.
- Cash flow report: Cash movements and upcoming commitments.
- Budget versus actual report: Differences between planned and actual results.
- Grant and project reports: Restricted funding, expenditure and project performance.
The Australian Charities and Not-for-profits Commission’s (ACNC) 2026 Financial Management Tool recommends considering a charity’s financial position at each board or committee meeting.
Understanding your reporting obligations
Financial reporting requirements vary according to the size and circumstances of an ACNC-registered charity.
Registered charities generally need to submit an Annual Information Statement. Medium and large charities must also submit an annual financial report, while small charities can choose to submit one unless another requirement applies. Review and audit requirements also vary by charity size.
Boards should understand which reporting requirements apply to their NFP rather than assuming every charity has the same obligations. Working with professional accounting firms in Sydney can give NFP boards additional support in meeting these requirements.
Reliable decisions start with reliable records
Boards can only make sound decisions when the underlying financial information is accurate.
The ACNC requires registered charities to maintain appropriate financial and operational documents that correctly record and explain transactions, financial position and performance, and support financial statements where required. If transactions are incomplete or incorrectly classified, board reports may not provide a reliable basis for decisions.
For NFPs without an in-house finance team, not for profit bookkeeping services can provide regular reconciliations, transaction coding and reporting support.
7 ways NFP boards can use financial reports for better decisions
1. Compare actual results with the budget
A budget gives the board a financial benchmark. Comparing actual results can reveal where assumptions are no longer holding up. Ask why significant variances occurred and whether spending, forecasts or funding need to change.
2. Keep a close eye on cash flow
A surplus on the profit and loss statement does not necessarily mean an NFP has enough cash available.
Boards should consider upcoming wages, supplier payments, grant expenditure and other commitments alongside expected receipts. Regular cash-flow forecasts can identify potential shortfalls early.
3. Understand restricted and unrestricted funds
Not all revenue is available for general use. Grants and other funding may have conditions about how money can be spent.
Boards should understand how restricted funds are tracking, what remains unspent and whether expenditure meets funding requirements. Accurate not for profit bookkeeping helps distinguish funding sources and projects.
4. Identify financial risks early
Financial reports can help boards spot warning signs such as declining revenue, rising employee costs, increasing liabilities, falling cash reserves or repeated deficits.
Looking at trends over several reporting periods is often more useful than focusing on a single month. Boards can ask:
- Is our financial position improving or deteriorating?
- Are costs growing faster than revenue?
- How long could our cash reserves support operations?
- Are we too dependent on one funding source?
- Are there commitments that need closer attention?
Regular financial oversight is also part of responsible charity governance, with ACNC guidance helping charities manage financial risks and meet their obligations.
5. Connect financial performance to purpose
Financial reports should help boards decide whether resources are supporting the NFP’s purpose. If program costs increase while participation or funding declines, the board may need to consider whether the program remains sustainable or needs a different funding model.
6. Make better funding decisions
Financial information can help boards assess grants, fundraising activities, programs and other revenue sources. Aside from funding generated, consider direct costs, staffing, administration, cash-flow timing and restrictions.
For NFPs managing multiple grants or projects, effective not for profit accounting services can make it easier to track funding against budgets and requirements.
7. Turn reports into questions
A financial report is more useful when it leads to a meaningful board discussion. Instead of simply receiving reports for noting, ask:
- What has changed since last month or quarter?
- Which results differ from the budget, and why?
- What risks are emerging?
- What decisions need to be made now?
- What should we monitor before the next meeting?
The ACNC recommends that boards consider financial reporting, budgets and financial controls as part of ongoing financial management practices.
Use financial reports to look forward, not just back
Financial reports tell boards what has happened. Their real value comes from using that information to decide what happens next. Reviewing budgets, cash flow, funding restrictions and risks can support better choices about programs, staffing, spending and funding.
If your board receives financial reports but still struggles to understand what the numbers mean, the issue may be the quality or presentation of the information rather than the board itself.
Keeping Company provides outsourced accounting services and outsourced CFO services in Sydney to help NFPs strengthen financial management, reporting and decision-making. Whether you need support with not for profit bookkeeping, financial reporting, budgeting or broader financial strategy, contact us today. We can help give your NFP board clearer information and greater confidence in the decisions ahead.
The material and contents provided in this publication are informative in nature only. It is not intended to be advice, and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.
Ryan Miller is the founder of Keeping Company, May 2011 – Present. A tie-loathing, people person with an entrepreneurial spirit. Ryan’s drive to modernize the accounting industry coupled with his desire to help people succeed saw the birth of Keeping Company. Focusing on the SME space, KeepingCo. empowers business owners by providing high-quality end-to-end accounting and business advisory services.
Ryan took his first Accounting role working at KPMG. He went onto further refine his skills as a Chartered Accountant taking the role of Director of a Chartered Accounting firm in Erskineville.
Ryan is a fully qualified Chartered Accountant and a member of the Institute for Chartered Accountants Australia and New Zealand. He is also a Registered Tax Agent and holds a Bachelor of Commerce from the University of South Australia.