New Compliance Requirements for Qld Incorporated Associations: the long-awaited ‘Grievance Procedure’ and More!
On 22 June 2023, the Governor in Council approved the ‘final’ changes of the staged updates to the Incorporated Associations Act 1981 (Qld) (the Act).
In keeping with the ‘staged’ theme, one of these changes takes place immediately (from 1 July 2023), whilst Associations will have 12 months to ensure the remaining two changes are in effect (from 1 July 2024). As these changes will likely require your Association to update its governing Rules or Constitution, we encourage all Associations to take steps now to be ready for the changes to commence in July 2024.
Immediate Changes – 1 July 2023
From 1 July 2023, financial reporting thresholds will increase, meaning the classification of your Incorporated Association (and therefore its’ financial reporting obligations) may change from its current level.
The changes are broadly as follows:
Large Associations
Former Classification Criteria/Threshold:
Level 1 Associations, having current assets or total revenue of more than $100,000
New Classification Criteria/Threshold:
- Assets of more than $1million OR
- Total Revenue of more than $500,000
Medium Associations
Former Classification Criteria/Threshold:
Level 2 Associations, having current assets or total revenue of between $20,000 and $100,000
New Classification Criteria/Threshold:
- Assets between $300,000 and $1million OR
- Total Revenue of between $150,000 and $500,000
Small Associations
Former Classification Criteria/Threshold:
Level 3 Associations, having current assets or total revenue of less than $20,000
New Classification Criteria/Threshold:
- Assets less than $300,000 AND
- Total Revenue of more than $150,000
Different financial reporting obligations (and in some cases, higher penalties for non-compliance) will apply, depending on what ‘Classification’ your Association is now categorised by. It is important for Associations to review what classification they are now considered to be, and determine whether any additional reporting obligations will apply. Enterprise Legal can provide assistance in this regard, including providing advice regarding whether any additional obligations will apply if your Classification has changed.
Final Changes – 1 July 2024
Grievance Procedure
Incorporated Associations must have a formal Grievance Procedure in place from 1 July 2024. If an Association has not adopted their own procedure (which must meet some ‘minimum’ criteria, see below) via an amendment to its Rules or Constitution by this date, then the Association is deemed to have adopted the procedure that is set out in the Model Rules (Rule 12). At a minimum, the procedure must allow a member to appoint any person to act on their behalf, give each party involved an opportunity to be heard, provide for unbiased mediation (if the dispute cannot initially be resolved) and ensure a decision-maker is unbiased (if the procedure calls for a person to ultimately decide the outcome of the dispute).
The procedure set out in the Model Rules will not always be suitable to a specific Association, and an Association may be better served adopting its own Grievance Procedure. This is where Enterprise Legal can assist, by working with your Incorporated Association to develop an appropriate Grievance Procedure that best serves your Association, while also meeting the minimum requirements set out by the Act.
Remuneration Disclosure
At every Annual General Meeting (AGM), the Management Committee will be obliged to disclose any remuneration and ‘other benefits’ given to the management committee (and their relatives) and any ‘senior staff’ of the Association. ‘Other benefits’ are not specifically defined in the legislation updates, and are instead linked to those benefits that are defined as ‘compensation’ in the Australian Accounting Standard AASB 124 – Related Party Disclosure. These include ‘consideration paid, payable or provided by the entity [i.e. the Association], or on behalf of the entity, in exchange for services rendered to the entity’ and largely relate to compensation that an Employer would pay to an Employee (such as wages and salaries, through to free/subsidised goods or services). This is obviously quite broadly defined, so the conservative approach would of course be to record everything that borders on a ‘benefit’ and then include it in the disclosure given.
That said, this information can be ‘aggregated’ as a total value of the benefits paid by the Association. It is not clear whether the ‘value’ of the benefits paid are to be disclosed based on a ‘retail’ or ‘cost’ value. Again adopting a conservative approach, Associations should calculate those benefits on the higher ‘retail’ value, but either way, the calculation should be consistent for all benefits paid. Importantly, any failure to disclose this information can incur a penalty for each member of the Management Committee.
How Enterprise Legal Can Assist
Whilst there are only three changes that come into effect from the final ‘round’ of changes to the Act, they present a great opportunity for Incorporated Associations to review their corporate structure, governing documents and policies and procedures. Certainly if you were unaware of the previous rounds of changes (which took effect in June 2020, June 2022 and July 2022), it is now vital to understand what those changes were, and how they affect your Association.
Enterprise Legal has extensive experience in corporate governance and structuring matters with a particular expertise in assisting non-profits, charities and sporting organisations. We can assist your Association with assessing your current structure, reviewing your governing documents or policies or procedures (or creating new ones to ensure you are compliant with all of the ‘recent’ changes) or providing governance training to members of your Management Committee/Board.
If we are able to help with any of the above, please contact our team today and we will be happy to assist you.