Compliance changes in response to COVID-19
COMPLIANCE CHANGES IN RESPONSE TO COVID-19
In recognition of the unique challenges brought about by COVID-19, the ACNC has decided that the ACNC will not investigate certain breaches of the Governance Standards and the External Conduct Standards that occur from 25 March until 25 September 2020.
This approach is explained below:
Standard
Circumstance
Conditions on which action will not be taken
Governance Standard 1 and External Conduct Standard 1 – A charity cannot operate outside its charitable purposes.
A charity seeks to operate outside its purposes.
All activities align to the charity's purpose or purposes on a broad interpretation, or are incidental or ancillary to its charitable purpose or purposes.
If a charity takes on activities in response to COVID-19 that do not clearly align with its charitable purpose or purposes, it:
·
Reasonably shows that its members would approve of the activity
·
Documents how it believes the new activities align with its charitable purpose or purposes, or are incidental or ancillary to its charitable purpose or purposes.
Governance Standard 5 – The charity requires Responsible People to ensure it does not operate while insolvent.
The charity incurs debts such that it becomes insolvent.
The Commissioner's approach to this issue will follow the amendments made to the
Corporations Act 2001
by the
Coronavirus Economic Response Package Omnibus Act 2020
, except that it will apply to all charities and not just those that operate as companies limited by guarantee.
The debt is incurred: in the ordinary course of business, during the relevant period, and before the appointment of an administrator or liquidator.
The charity must ensure that its Responsible People are aware of the issue and have an achievable aim to return to viability when the crisis has passed. The charity must inform its members and the ACNC if it is trading insolvent.
External Conduct Standard 1 – A charity is required to obtain and keep records for its operations outside Australia
The charity is unable to obtain reporting from its overseas operations or partners
The charity should:
·
Record the reasons it is unable to obtain reporting, and
·
Obtain reporting as soon as practicable.
The ACNC believes this short-term position is appropriate to allow charities to operate effectively and to enhance public trust and confidence in the sector.
If the ACNC identifies significant breaches that harm the public interest, even if it involves activities related to COVID-19, the commission may still investigate the issue and take regulatory action.
