Reporting of the remuneration of 'key management personnel' in financial statements is not a new phenomena. It has been required for a range of corporations for many years under Australian Accounting Standards and since April 2022 for many charities.
However a number of tabloid media outlets have grasped the data now available for many charities to prepare 'exposé' type articles revealing salaries associated with a range of independent schools, with accompanying photos of the school leaders.
Of course, salaries in Christian schools are general modest compared to those in some higher fee schools. Equally, transparency over executive salaries, which is the purpose of these disclosure requirements, provides a healthy level of accountability. Nonetheless, the publication of salaries of individuals within any organisation, especially in the journalistic style of these articles can be distressing.
It is important to note that the definition of ‘key management personnel’ from Australian Accounting Standards AASB 124 (paragraph 9) and AASB 1060 (paragraph 193) is as follows:
'Key management personnel are the people with authority and responsibility for planning, directing and controlling the activities of an entity, directly or indirectly, including any director (whether executive or otherwise) of that entity.'
As the ACNC note in their guidance, they are the senior decision makers in a charity and do not include team leaders or operational managers. It would, however, include:
- Responsible People (for example, the board or committee members)
- Senior school staff (for example, the Principal, Business Manager, and other senior executives in larger entities, which could include Heads of Campus and possibly other financial or operational staff).
Your school auditor will assist in the determination of who are the ‘key management personnel’ and how to determine and disclose remuneration in accordance with the relevant statutory requirements.
While the key factor is meeting statutory requirements, these calculations and disclosures need to be done carefully to ensure that any accurate picture of the reality of your school's situation.