Unaudited Financial Statements

The most common errors we find

Many small and community organisations prepare unaudited financial statements in Xero or MYOB without an independent review. While this approach can save time, it often leads to avoidable errors that affect compliance and transparency.

At J O'Connor Pty Ltd, we frequently identify common issues during reviews and audits — particularly in community associations, clubs, and not-for-profits.

1. Not Registered for GST When Required

   Not-for-profit organisations must register for GST once their GST turnover reaches $150,000 (the threshold for businesses is $75,000). Many community organisations pass this mark through grants, canteen sales or membership fees without anyone noticing. If the ATO finds you should have registered, it can register you from the date you crossed the threshold, which means GST is owed on income you have already spent, and penalties may apply. Registering also lets you claim back the GST on what you buy.

2. Bank Accounts Not Reconciled

   Xero or MYOB bank reconciliations are often incomplete or skipped. This leads to incorrect cash balances and can hide duplicate transactions or missing deposits. Not sure what proper records look like? See what financial records an association must keep.

3. Duplicate Payments or Transactions

   Duplicate entries for invoices or expenses inflate expenditure and reduce the reported surplus. Regular reviews and audit procedures are key to identifying and correcting these issues.

4. Missing invoices or supporting documents for payments

   Missing invoices or receipts create a real risk of misuse of funds, duplicate or unauthorised payments, and failed audit and governance requirements. Both the Associations Incorporation Act 1981 (Qld) and the ACNC's Governance Standards require an organisation to keep records that correctly explain its transactions, which means every payment needs a document showing what was bought, from whom, and why. If the organisation is registered for GST, a tax invoice is needed for purchases over $82.50 (GST inclusive) to claim the credit. Poor records can lead to a qualified audit opinion, repayment of grant funds, or loss of grant eligibility. If the missing receipts come from debit cards, our new treasurer's guide to debit cards explains what to do first.

5. Not registered for Single Touch Payroll, superannuation or Workers Compensation

   Failing to register for Single Touch Payroll (STP), pay superannuation, or hold workers compensation insurance exposes an organisation to significant statutory and financial risk. STP reporting is required under the tax law (Taxation Administration Act 1953), superannuation under the Superannuation Guarantee legislation, and every Queensland employer must insure with WorkCover Queensland under the Workers' Compensation and Rehabilitation Act 2003 (Qld). The Fair Work Act 2009 sets the wages and entitlements that must be paid. Non-compliance can result in ATO penalties and charges, loss of funding eligibility, and — for unpaid superannuation — personal exposure for the people responsible for running the organisation.

6. No asset register or depreciation schedule

   Not maintaining an asset register or depreciation schedule creates a risk of misstated financial position, loss of assets, and non-compliance with statutory reporting obligations. Under the Associations Incorporation Act 1981 (Qld), incorporated associations are required to keep accurate accounting records, including details of assets and their value, to properly reflect the organisation's financial affairs. Without an up-to-date asset register, committees cannot verify ownership, monitor asset condition, or ensure assets are adequately insured. Read what a depreciation policy is — it includes a sample policy your committee can adopt.

7. Non-Compliance with Legislation and Recent Changes

   Failure to stay informed about legislative changes under the Associations Incorporation Act 1981 (Qld) and the Australian Charities and Not-for-profits Commission Act 2012 can result in significant governance and reporting breaches. These Acts require committee members to ensure that financial records are properly kept, annual statements and reports are lodged on time, and the organisation continues to meet eligibility and accountability standards. Recent amendments to both Acts have strengthened director and officer duties, reporting thresholds, and related-party disclosure requirements. Lack of compliance may lead to loss of registration, funding ineligibility, or personal liability for management committee members. The most recent change affecting every Queensland association is the remuneration and related-party disclosure rule.

8. Cash vs Accrual Accounting

   Many community organisations are unsure of the difference between cash and accrual accounting, yet choosing the wrong method can lead to misstated income and expenses. Under the Associations Incorporation Act 1981 (Qld) and the Australian Charities and Not-for-profits Commission Act 2012, financial statements must accurately reflect the organisation's financial performance and position. In cash accounting, income and expenses are recorded only when money changes hands — for example, a grant payment received in July is counted entirely in that year, even if some funds relate to the following period. In accrual accounting, income and expenses are recorded when they are earned or incurred, not when cash is received or paid — so part of that grant would be deferred to the next year to match the related expenses. Using the incorrect method can distort results, make budgets unreliable, and create difficulties when reconciling with audit or funding requirements.

Why These Errors Matter

Even small bookkeeping mistakes can distort your organisation's financial position and lead to serious compliance risks. Unaudited statements may appear balanced, but unreconciled accounts, missing GST, or duplicate payments can quietly erode available funds. In many cases, questions only arise when there's no money left to pay bills — when bank balances don't match reports, or when a committee suddenly notices a cash shortfall. By then, it's often too late to make simple corrections. An independent financial review provides an early warning system. We identify discrepancies, explain their impact, and help ensure your organisation's reports are accurate, transparent, and ready for decision-making. If the shortfall has already arrived and there are ATO or superannuation debts, read our plain-English guide to going concern, ATO debts and insolvency. New to the role? Start with your first year-end as treasurer.

Ready to get back on track?

Let's make compliance clear, calm, and straightforward — so you can stay focused on your mission.