Charitable Companies and Related Party Transactions

Abstract

In response to a recommendation by the Panel reviewing the Australian Charities and Not-for-profits legislation, the Australian Federal Government has announced that charities will be required to disclose related party transactions. The problem of related party transactions is a common theme in the compliance reports of the Australian Charities and Not-for-profits Commission. This article critically analyses the issue of related party transactions within the Australian charities sphere, as well as potential reforms. It concludes that reporting of such transactions is the most sensible first step but that further attention should be given to the contours of such reporting.

Keywords: related party transactions, companies, corporate governance, nonprofit organisations, charities, charitable companies, accounting standards

JEL Classification: K00, K10, K20, K22