FWC reveals top financial reporting mistakes of FY24

The Fair Work Commission has released its 2024 report card outlining the most common financial reporting mistakes made by firms.

In its 2024 financial reporting report card, the Fair Work Commission found that 70 per cent of financial reports were compliant, a slight fall from 2023 compliance levels (75 per cent).

The top issues that were not remedied from the previous year related to incorrect nil activity disclosures and incorrectly prepared Subsection 255(2A) reports, the FWC found.

Subsection 255(2A) reports outline total spending on employee-related costs and remuneration, advertising, operating costs, donations to political parties and legal costs. In order to reduce reporting errors, the FWC encouraged firms to use its ‘model financial statements’ tool to ensure their Subsection 255(2A) report disclosed all of the required expenditure categories.

It also reminded firms that financial reporting guidelines required them to disclose certain information in their reports, even if they were nil.

Common missing or incorrect nil disclosures in financial reports included payables in respect to ‘other legal costs’ and payroll tax deductions for membership subscriptions. They were also related to grants and donation expenditures.

Out of the non-compliant firms, the FWC found that 23 per cent did not lodge their reports within the 14-day time frame. The regulator noted that it expected firms to submit their reports within 14 days after being presented at a general meeting of members, or a second committee of management meeting.

To avoid late lodgements, the FWC encouraged companies to consider using its compliance calculator planning tool to identify time frames and mark their calendars.

In their reports, over half (60 per cent) of non-compliant firms had incorrectly referenced the Registered Organisations Commission (ROC), which was abolished in 2022, instead of the FWC, which currently regulates registered organisations.

The FWC reminded reporting entities to ensure that they referred to the FWC or the General Manager of the Fair Work Commission, not the obsolete ‘ROC’ or ‘the Commissioner,’ in their financial reports.

Firms should also ensure that material information is clearly and separately disclosed in their financial reports, the FWC added. In 2024, it was found that 13 per cent of non-compliant reports had obscured the disclosure of material items.

“Ensure that material items in nature or magnitude are separately disclosed and described in a way that isn’t vague or unclear to members,” the commission said.