On 7 November 2011 NSW Fair Trading released its discussion paper, which can be accessed here. The discussion paper proposes the introduction of a legislative scheme which will be in the form of a code called the Co-Operatives National Law, initially to be passed by the NSW Parliament, but then to be either adopted or passed as consistent legislation by other jurisdictions around Australia. This development follows on from public consultation which occurred towards the end of 2009 on a range of aspects of the proposed legislative schemes.
The questions posed by the discussion paper largely focus on public accountability measures, the advantages of reviewing instead of auditing and reporting to members of co-operatives. In particular, Not-For-Profit organisations are invited to provide their comments in relation to the following issues:
- the costs and benefits of public accountability through financial reporting;
- whether a co-operative’s ability to fundraise in certain ways should be determinative of public accountability measures;
- whether the impact of the failure of a co-operative on stakeholders should be used as the threshold for determining public accountability financial reporting for co-operatives;
- whether deductible gift recipient endorsement should be the deciding factor to determine whether different public accountability requirements are required of certain of co-operatives or whether the receipt of government grants is also a significant factor;
- should co-operatives have their accounts reviewed instead of audited and should this depend on the size of the co-operative;
- costs and benefits of the reduction in the number of co-operatives being required to lodge audited financial reports;
- should the Australian Accounting Standards continue to be the basis for the recognition, measurement and classification of transactions for co-operatives;
- what information should be provided to members to enable them to assess the financial health of the co-operative or to decide to allocate resources or to commit to a co-operative;
- the utility of using the National Standard Chart of Accounts as a model for classification of expenditure and balance sheet items for co-operatives;
- costs and benefits of utilising the best practice reporting model for Not-For-Profits produced by the Institute of Chartered Accountants.
As usual, we will submit our views on these topics to NSW Fair Trading, but Not-For-Profit organisations should consider whether they wish us to assist them or with their submission.