Australian Auditing Standards contain requirements, application and other explanatory material that apply to the audit of the financial report of any entity, including not-for-profit entities, irrespective of their size, legal form, or the nature of their activities. However, the AUASB recognises that the audit of not-for-profit entities gives rise to a number of specific audit issues, a significant one of which is forming a conclusion and reporting on the completeness assertion in relation to fundraising revenue from sources such as cash donations, appeals, raffles and other fundraising activities.

From an audit perspective, there can often be uncertainty as to whether a not-for-profit entity has received all cash donations to which it has a right from its respective fundraising or other revenue generating activities as adequate controls may not be in place over all sources of revenue. Consequently, an auditor may find it difficult to perform tests of controls and substantive procedures that are necessary to reduce assurance engagement risk, particularly in respect of the completeness of cash donations, to an acceptable level. When such a scope limitation exists, the auditor considers expressing a qualified opinion. However, the expression of a qualified opinion in respect of the completeness of cash donations as a portion of fundraising revenue ought not occur as a matter of course for all not-for-profit entities that receive cash donations. Consideration needs to be given to materiality and mitigation of risks through internal control structures or other factors affecting the environment in which the not-for-profit entity operates.

The guidance provided is applicable to all audits of not-for-profit entities as typically these entities are more reliant on cash donations from fundraising activities as a significant source of their revenue base as compared to a for-profit entity. The guidance is designed to assist the auditor in exercising professional judgement in the application of the Auditing Standards. This guidance statement also contains Appendix 1 which outlines various audit risks associated with different sources of fundraising revenue and indicative audit procedures that may be adopted for each source of fundraising revenue.