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Xero Record-Keeping Checklist for NFPs: Meeting ACNC Rules

Many not-for-profits use Xero, but far fewer have set it up to keep the records the ACNC expects. Good records are not just a compliance task. The ACNC links good records directly to sound governance and risk management, and has made record keeping part of its 2025-26 regulatory focus.

This checklist shows how to use Xero to meet your record-keeping obligations and give your board reliable information. For a full chart of accounts guide, see our [Xero for not-for-profits setup guide](/insights/xero-for-not-for-profit-australia).

Quick Summary

• Registered charities must keep financial and operational records for **seven years**, in English or a form readily translated into English.
• Financial records must explain how money is received and spent, and show your financial position and performance.
• Xero can hold most financial records, but only if receipts, approvals and explanations are attached and kept.
• Restricted funds need their own tracking so you can prove they were spent correctly.
• The board should receive regular reports and know who has access to the accounts.

What the ACNC expects

The ACNC requires registered charities to keep:

• **Financial records** that correctly record and explain transactions, and allow true and fair financial statements to be prepared and audited or reviewed where required
• **Operational records** that show the charity is entitled to its registration and subtype, and meets its obligations under tax law and the ACNC Act

Records must be kept for seven years and can be electronic, as long as they are easy to find.

The Xero checklist

Set-up

• [ ] **Chart of accounts** separates income by source: grants, donations, fees, fundraising and investment income.
• [ ] **Tracking categories** are set up for programs and for each restricted grant or appeal.
• [ ] **Restricted funds** have their own balance sheet accounts so unspent amounts are visible.
• [ ] **GST settings** match your registration status.
• [ ] **User roles** follow the principle of least access. Only those who need to approve payments can do so.

Every transaction

• [ ] A **receipt or invoice is attached** in Xero for every expense.
• [ ] Each transaction has a **clear description** of what it was for, not just the supplier name.
• [ ] **Grant-funded spending is tagged** to the right tracking category.
• [ ] **Donations are recorded** with enough detail to issue receipts and, if you are a DGR, to identify tax-deductible gifts.

Approvals and controls

• [ ] **Two people** are involved in every payment: one prepares, another approves.
• [ ] **Approval limits** match your delegations policy, and evidence of approval is kept.
• [ ] **Bank reconciliations** are completed at least monthly and reviewed by someone other than the preparer.
• [ ] **Lock dates** are set after each month or year is closed, so past periods cannot be changed by accident.

Reporting to the board

• [ ] The board receives a **monthly or quarterly report**: profit and loss against budget, balance sheet, cash position and restricted funds.
• [ ] **Grant reports** can be run from tracking categories without manual spreadsheets.
• [ ] The **finance committee minutes** record that reports were reviewed and any questions asked.

Keeping records for seven years

• [ ] Xero files and attachments are **retained for at least seven years**, including after any change of software or subscription.
• [ ] **Year-end reports** are exported and saved with the audited or reviewed financial statements.
• [ ] **Operational records** live alongside the financial records: board minutes, the governing document, registers of Responsible People, policies, grant agreements and AIS lodgement confirmations.
• [ ] A **handover pack** exists so a new treasurer or bookkeeper knows where everything is.

Common gaps we find

1. No attachments. Bank feeds are reconciled, but there are no receipts, so transactions cannot be explained. 2. Restricted grants mixed with general funds. The board cannot see how much is really available. 3. One person does everything. The same person creates, approves and reconciles payments. 4. Lost history. An organisation changes software or bookkeeper and old records disappear. 5. Board papers that are not kept. Decisions about money are made, but minutes and reports are not filed.

Why this matters for governance

Under ACNC Governance Standard 5, Responsible People must oversee the charity's finances responsibly. A board cannot do that without reliable records and regular reports. Setting up Xero properly gives the board the information it needs, and gives your auditor or reviewer a clear trail to follow.

Frequently Asked Questions

Q: How long must a charity keep its Xero records? A: The ACNC requires registered charities to keep financial and operational records for seven years. Make sure this includes attachments and history if you ever change software.

Q: Is a bank feed enough as a financial record? A: Usually not. Records must explain transactions. A receipt or invoice and a clear description for each transaction are what make a record useful.

Q: Can our records be kept electronically? A: Yes. The ACNC accepts electronic records as long as they are easy to find and are in English or can be readily translated into English.

The Bottom Line

Xero is a strong tool for NFP record keeping, but only when it is set up with good controls, attached evidence and regular board reporting. Work through this checklist once a year with your treasurer or finance manager.

Official guidance

• [ACNC: Record keeping](https://www.acnc.gov.au/tools/topic-guides/record-keeping)
• [ACNC: Examples of financial and other records](https://acnc.gov.au/for-charities/manage-your-charity/obligations-acnc/keeping-charity-records/examples-financial-and-other-records)
• [ACNC: 2025-26 regulatory focus on record keeping](https://www.acnc.gov.au/media/news/2025-26-regulatory-focus-highlights-critical-importance-good-record-keeping)

This article is general information only and does not take your organisation's circumstances into account.

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