The A21 Campaign Limited, charity review

This is a review, for donors, of the Australian charity The A21 Campaign Limited (A21). It is structured according to the charity’s entry on the ACNC[i] Register, and its purpose is to supply some information extra to what is there, information that may be helpful in your giving decision.

It is up to you to decide whether any or all of the information presented here is what you need in order to make that decision, and whether you need to seek any other information, either from the charity itself or from other sources.

Ministry response

Prior to publishing this review, I sent my observations to the charity and invited them to comment. They did not respond.

Organisation of this review

  1. This review is organised according to the headings in the register entry. This is how to use this section of the review:
    • For each heading in the register entry, first read the information under that heading.
    • Then check if that heading is included below. (Headings for which there is no comment are not included.)
  2. There is then a more detailed comment on the Financial Report.
  3. Lastly, there is a section Membership of accountability organisations claimed.

Sources

CHARITY DETAILS

Legal Name

Charity ABN

  • Tax deductibility: You can claim a tax deduction for a donation to A21.

Charity Street Address

  • Postal address: P.O. Box 7820 Baulkham Hills BC NSW 2153

Website

  • Make sure Australia is selected in the top left hand corner.

REGISTRATION DETAILS

Entity Subtype

  • Although I am assured[ii] that A21 is a ‘Christian’ (Christ-centred) organisation, ‘Advancing religion’ is not one of the subtypes, and there’s nothing on the website, in the Financial Report, or in the Constitution to indicate that it is.
    • For the US organisation its Christ-centred status is confirmed by A21’s membership of the Evangelical Council for Financial Accountability (ECFA)[iii] (see below).

ANNUAL REPORTING

  • Basic financial information is shown in the AIS 2014. If you think that’s all you might need (or want[iv]) then you should note that, in the Financial Report,
    • Employee expenses are considerably less than the $519K shown here, at $166K (Note 3), and
    • you should move $10,056 from Other Income to All other revenue.
  • The coverage of finances in this review is left until the financial report proper (below).

CHARITY’S DOCUMENTS

Financial Report

  • This report can be opened either from here or from within AIS 2014 under Annual Reporting (above).
  • The Financial Report was completed a little over four months from their year-end, and put on the ACNC Register a month later. This was still within the six month period normally allowed.
  • The ACNC allows charities to put their Annual Report or similar on the Register. A21 has not taken advantage of this, nor is there one on their website or an invitation to request one.

ABOUT THE CHARITY

Who the Charity Benefits

Mission/vision

  • In the header on every page of the website: Abolishing Injustice in the 21st Century.

Activities

  • A very clear description here.

Outcomes/impacts:

  • Unfortunately in the AIS 2014, in response to the request to describe activities and outcomes, it is mostly activities.
  • There’s no Annual Report/Review, nor an offer to send one, on the website.
  • There are nine stories of individuals helped in the blog category called ‘Survivor Stories’.

Size of Charity

  • 2013-14 ‘Revenue’ was $1.6 m, easily exceeding the $1 m threshold for the top size of charity.

Financial Year End

  • This means that the next financial report is due by 30 June 2016. Before that the financial information on the Register will be up to 18 months out-of-date.

WHERE THE CHARITY OPERATES

Operating State(s) [v]

  • They have a licence to fundraise in NSW, the location of their office, but also in Tasmania. But not in the other five states that have a licensing system.

Operates in (Countries)

  • Except for the splitting of the United States into two, this list matches the website.
  • Click on the name here to go to the website/Facebook page for the country.

RESPONSIBLE PERSONS

  • Feben has been appointed, and Covington and Domingue have left, since the Directors’ Report was signed on 8.05.2015[vi].
  • To see all a director’s positions in Australia, search here.

No. of Australian directorships[vii]

Nicholas CAINE[viii]                          The A21 and Equip and Empower

Kylie DIMAURO                                  The A21 and Equip and Empower

Adrian FEBEN                                     The A21 and Equip and Empower

Jeremy HORN                                     The A21 and Equip and Empower

Loriann LOWERY-BIGGERS                 1

 

(End of review of the ACNC Register information)

 

Latest financial report – detail

Directors’ Report (page 1 of the Financial Report)

  • ‘Principal activities’ is missing how these activities helped in achieving the organisation’s objectives.
  • You should have also been told the organisation’s
    • Short-term objectives
    • Long-term objectives
    • Strategy for achieving those objectives, and
    • How it measured its performance
  • If you are interested in the liability of members, it is in Note 13 instead of here.

An independent opinion on the financial statements : the Independent Auditor’s Report (page 5 of the Financial Report)

  • The required reference to the ACNC Act is absent.
  • The auditor, in accepting the engagement, has assessed the directors’ decision that A21 is not a ‘reporting entity’, and agreed with it. That is, they also think that A21 doesn’t have any users (either existing or prospective) who are dependent on a general purpose report (that is, a report prepared for those who are not in a position to require A21 to produce a report tailored to their needs).
  • This is a ‘clean’ opinion. Read here and here to draw the right conclusions from this.

Where the directors put their name to the report: the ‘Directors’ declaration’ (page 7 of the Financial Report)

  • For an organisation that has not only ‘Donate’ in its website main menu, but ‘Fundraising’, a selection that invites people to start a fundraising campaign for A21, and received $1.6 m in donations last year you may find it difficult to understand how the directors concluded that all these donors, both current and prospective, have the capacity to command the preparation of financial statements tailored to their needs.
  • This decision meant that A21 could produce financial statements that did not need to comply with all the Australian Accounting Standards, and therefore produce statements that the Australian standard setters have deemed not suitable for those people who rely on A21’s financial statements as their major source of financial information.
  • An example of the information that you might not get as a consequence is the relationship that A21 has with the other A21 organisations around the world[ix].
  • ‘The A21 Pty Limited’ is meant to be ‘The A21 Campaign Limited’, and ‘owners’ should be ‘members’.
  • Because A21 is a charity, the reference should be to the ‘the ACNC Act’ rather than ‘the Corporations Act’.

What was earned, what was consumed during the year – the Statement of profit or loss and other comprehensive income (page 8 of the Financial Report)

Incoming Resources

  • This is not a correct description of what’s included in the calculation of comprehensive income.

Contributions $1.6 m

  • We are not told why this revenue almost doubled.
  • Or how much was received as a result of donations as opposed to fundraising.
  • There is no accounting policy note for this item.

Activities for generating funds $13K (including Note 2)

  • We know that A21 sells goods but there is no information – accounting policy or dollars in the Statement of Financial Position – about inventories.

Investment income $10K

  • There is no accounting policy disclosed for investments.
  • There is no explanation for why A21 is investing donor’s money.
  • Why is this figure identical to that for interest income in the Statement of Cash Flows?

Resources Expended

Charitable Activities $1.0 m

  • You can find a good explanation of these four activities on the website.
  • This section uses a classification by function whereas the next section, ‘Supporting Services, classifies expenses by their nature.
    • It is therefore not clear whether these four line items include a share of the ‘Fundraising’ and ‘General and administrative costs’ in the next section.
  • The AIS 2014 shows that only $440K of this went overseas to achieve A21’s mission.
  • This is only 27% of money received from donors.
  • We are not told where the money was sent.

Supporting Services $448K

  • The cost of the goods that A21 sold is not disclosed.

Fundraising expenses $133K

  • There is no explanation of what is included in this item. 

General and administrative costs $316K (including Note 3)

  • Employee salaries and benefits $166K are the majority of this figure.
    • This amount is, without explanation, $353K less than the amount disclosed for Employee expenses in the AIS 2014.
    • In June 2015 A21 had six full-time, three part-time and one casual employee, numbers that also don’t fit with the $166K above.
  • Intangibles exist yet there is no amortization expense.
  • A21 is an international organisation and yet there are no travel and accommodation expenses.
  • A21 is not typical in allowing the payment of directors’ fees (see the Constitution under Charity’s Documents. We are not told whether any were paid.

What’s left at the end of the year – the Statement of financial position (page 9 of the Financial Report)

Cash and cash equivalents $770K (including Note 4)

  • No reason is given for holding such a large amount of savings.

Property, plant & equipment $16K (including Note 6)

  • The sale of the company’s property is the reason for the large reduction from 2013.

 Intangibles $131K (including Note 7)

  • Possible impairment not mentioned.
  • Despite the website servicing all A21 organisations, it appears that the Australian company has borne all the costs of developing the website.

Trade & Other Payables $36K (including Note 8)

  • There is no provision for long service leave.

How the net wealth has changed – the Statement of changes in accumulated funds (page 10 of the Financial Report)

  • If you are trying to understand this statement, note that the $666,992 figure needs to go up one line, and the surplus for the year from the statement two pages back needs to be inserted next to (Deficit)/Surplus for the year’.

Essential information[x] to go with the figures: the Notes to and forming part of the Accounts (page 12 of the Financial Report)

1 Statement of significant accounting policies

Basis of Preparation

  • It is the ACNC Act that governs the report, not the Corporations Act.
  • Given that four of the five A21 directors are also four of the five directors of Equip and Empower, and that the two charities operate from the same office, it is legitimate to question whether one of these charities controls the other.

Accounting policies

(a) Revenue

  • This note doesn’t match the types of revenue A21 earned.

(k) Critical accounting estimates and judgement

  • It is hard to believe that, despite the inherent imprecision of accounting, the directors did not make a single critical estimate or judgment.

(l) New accounting standards and interpretations

  • This incorrectly combines two required disclosures:
    • New and amended standards adopted, and
    • Standards issued but not yet effective and not adopted early. There should be a list under this one.

Membership of accountability organisations claimed

  • None claimed.
  • It is not possible to check membership of Missions Interlink.
  • The US A21 is, however, a member of the ECFA.

 

(End of review)

 

 

 

[i] Australian Charities and Not-for-profits Commission, Australia’s national regulator of charities.

[ii] From a Facebook respondent (after I couldn’t get a response from either of the email addresses on the ACNC Register). I didn’t ask though the extent to which they share the Gospel by word.

[iii] The ECFA’s Standard 1 says that

Every organization shall subscribe to a written statement of faith clearly affirming a commitment to the evangelical Christian faith, or shall otherwise demonstrate such commitment, and shall operate in accordance with biblical truths and practices.

There is no statement of faith on the US website. Note that, even if there were, it does not need to say anything about spreading the Gospel by word.

[iv] Those who wrote the rules for the financial statements say that, as a user, you ‘are assumed to have a reasonable knowledge of business and economic activities and accounting and a willingness to study the information with reasonable diligence’ [Framework for the Preparation and Presentation of Financial Statements, www.aasb.gov.au, paragraph 25].

[v] This is how the ACNC explains ‘operating locations’ in their application guide: ‘You need to give details about where in Australia your organisation conducts (or plans to conduct) its activities.’

[vi] Covington, however, is still a ‘responsible person’ for Equip and Empower Ministries Limited, an Australian charity whose other directors are also directors of A21, and a director of the US organisation.

[vii] Because of the possibility of two (or more) directors having the same name on the register of responsible persons, it is not possible to be definitive about the number of directorships held.

[viii] Caine and Dimauro are also trustees for the UK organisation, and directors of the US corporation, and Lowery-Biggers a director of the US organisation.

[ix] The Directors’ Report has an acknowledgement of the closeness of the relationship between, at least, the Australian and US organisations:

The surplus for the financial year was $221,603 compared to a deficit of $142,685 in the previous year, with the increase predominantly due to a significant US donor deciding to donate through their Australian arm to The A21 Campaign in Australia instead of The A21 Campaign in the USA.          

[x] Accounting Standard AASB 101 provides that ‘The Notes shall:

present information about the basis of preparation of the financial statements and the specific accounting policies used in accordance with paragraphs 117-124;

disclose the information required by Australian Accounting Standards that is not presented elsewhere in the financial statements; and

provide information that is not presented elsewhere in the financial statements, but is relevant to an understanding of any of them [paragraph 112].

ACC International Missions Ltd Review

This is a review, for donors, of the Australian charity ACC International Missions Ltd[i] (ACCIM). It is structured according to the charity’s entry on the ACNC[ii] Register, and its purpose is to supply some information extra to what is there, information that may be helpful in your giving decision.

It is up to you to decide whether any or all of the information presented here is what you need in order to make that decision, and whether you should seek any other information, either from the charity itself or from other sources.

Ministry response

Prior to publishing this review, I sent my observations to the charity and invited them to comment. After an initial email response from the CEO, and a phone call from their auditor, they decided not to offer anything for publication.

Organisation of this review

  1. The first part of this review is organised according to the headings in the register entry. This is how to use this section of the review:
      1. For each heading in the register entry, first read the information under that heading.
      2. Then check if that heading is included below. (Headings for which there is no comment are not included.)
  2. There is then a more detailed comment on the Financial Report.
  3. Lastly, there is a section Membership of accountability organisations claimed.

Sources

  • ACNC Register (including links)
  • Google search on the charity’s names (see below)[iii].
  • ACCIM website, and Facebook. (Nothing on LinkedIn.)
  • State government fundraising licence registers.

CHARITY DETAILS

Other Name(s)

  • Although this name, a business name, and the website Home page, leads one to believe that ACC International is one organisation with two operations, ACC International Relief Inc. is actually a separate charity.

Charity ABN

  • Tax deductibility: No tax deduction can be claimed for a donation to ACCIM.
  • ACCIM is not an ‘Other incorporated entity’ as it says via the link (ABN Lookup), but a company limited by guarantee.

ANNUAL REPORTING

  • Basic financial information is shown in the AIS 2014. If this information is sufficient for you then you, be aware that the information in the Income Statement doesn’t match that in the Financial Report:
    • ‘Employee expenses’: $1.0 m compared to $396K in the Report[iv]
    • ‘Grants and donations…’: $1.4 m compared to $1.9 m for ‘Disbursements to missionaries’ in the Report
  • The coverage of finances in this review is left until the financial report proper (below).

CHARITY’S DOCUMENTS

Financial Report

  • This report can be opened either from here or from within AIS 2014 under Annual Reporting (above).
  • The Financial Report was completed 2½ months after the year end; it was lodged one month later. (This was still well within the six month period normally allowed.)
  • There is no Annual Report or similar on the ACNC Register, nor, it appears (there is no search function), on the website.

Governing Document

  • Clause 16.1 – relevant to the question of who controls whom in the Australian Christian Churches group of organisations (see later) – doesn’t make sense:

…The Chairperson[v] of the Board of the Company, if a Director of the Organisation [the Company], is entitled to hold a position of chairperson of the Board.”

From Clause 16.5.7[vi] I suspect that it is meant to say that the Chairperson of the Australian Christian Churches (ACC), the church body, is entitled to be the Chairperson of ACCIM.

ABOUT THE CHARITY

Who the Charity Benefits

  • Vision: none found
  • Mission: none found. However, there is a Purpose Statement for the unincorporated non-charity ‘ACCI’, the combination of ACCIM and ACC International Relief Inc., on the ‘About us’ page of ACCIM.
  • Activities
    • From AIS 2014:

The principal activities of ACC International Missions Ltd during the financial year were: • To recruit, enable, support and send field workers to Australia and foreign countries to establish self-governing, self supporting and self propagating churches and preach the Gospel in Australia and other nations around the world; • To provide pastoral support, direction, vision and strategy for field workers as they prepare for ministry and minister overseas; • To work in synergy with local congregations within the Australian Christian Churches movement and assist them to fulfil the Company’s vision; and • To otherwise fulfil and follow the missionary objects of the Australian Christian Churches.

  • Outcomes/impacts:
    • Unfortunately in the AIS 2014, in response to the request to describe activities and outcomes, there are only activities (see above).
    • I could find neither an Annual Report/Review, nor an invitation to request one, on the website.
    • Or a description of impacts.

Size of Charity

  • 2013-14 ‘Revenue’ was $3.0 m, easily exceeding the $1 m threshold for the top size of charity.

Financial Year End

  • This means that the next financial report is due by 30 June 2016. Before that the financial information on the Register will be up to 18 months out-of-date.

Basic Religious Charity[vii]

  • There appears to be at least a measure of control possible by one though, the Australian Christian Charities church, via shared directorships (see below).

WHERE THE CHARITY OPERATES

Operating State(s) [viii]

  • There is no evidence of offices other than the one in Victoria (see above), so presumably the listing here reflects the fact that ACCIM fundraises all over Australia.
  • No fundraising licence is held in any of the seven states/territories that have a system of licensing.

Operates in (Countries)

  • It is not possible to match this list with the list of missionaries on the website because that list includes ACCI Relief workers plus sometimes the country is not specified.

RESPONSIBLE PERSONS

  • It appears that Elisa Colak was appointed since the Financial Report.
  • To see all a director’s positions in Australia, search here.
  • No. of Australian directorships (ACC=Australian Christian Churches)

Elisa COLAK                                     1

Alun DAVIES[x]                              4 (incl. ACC x 2)

Danny MAJOR                                 1

Ben TEEFY                                        1

Sean STANTON                               6 (incl. ACC x 2, and Assemblies of God in Australia[xi])

Darren KITTO                                  2

Alan DAVIES                                    2 (incl. ACCI Relief)

Keith ANGE                                     5[ix] (incl. ACCI Relief)

    • ACCIM is the missionary arm of ACC.
    • ACCIM’s website is as much about an unincorporated non-charity called ACC International, the combination of the charity ACCIM and the charity ACC International Relief Inc. (ACCIR). To what extent is ACCIM controlled by ACCIR, ACCIR by ACCIM, or both by one of the big ACC?
    • Where does the other ACC charity fit?
    • Ditto the current charity that uses the church’s old name, Assemblies of God in Australia (AOG).
    • See ‘Governing document’ above.
    • There are a number of cross-directorships:
      • The President of ACCIM, Alan/Alun Davies, is
        • VP of the basic religious entity (the large ACC)
        • A director of the small ACC, and
        • President of ACCIR
    • Sean Stanton is on the board of both ACCs and AOG.
    • Keith Ainge is Vice President of ACCIR

(End of review of the ACNC Register information)

 

Latest financial report – detail

Directors’ Report (page 1 of the Financial Report)

  • No specific ‘Key Performance Measures’ are disclosed.
  • The total liability of members in the event of a winding up, $300, implies that one or more directors, either current or within the last year, were not members. This is permitted in this company.
  • Minor disclosures missing:
    • Usual practice is to disclose the name of the holder of the mandatory office of Secretary.
    • The disclosure of the ‘experience’ of directors should extend beyond their current position.

What was earned, what was consumed during the year – the Statement of Profit or Loss and Other Comprehensive Income (page 5 of the Annual Report)

  • No separation of revenue from other income.
  • Expenses have not been classified consistently as either by function or by nature. For example ‘One Day Project expenses’ versus ‘Depreciation expense’.
  • Fundraising expenses, always a material expense for a charity, are not shown[xii].

Revenue $3.0 m (including Note 2)

  • The first and third items (‘Mission field income’ and ‘Partner Pledge/General Fund/Administration) have, together, the more helpful description of ‘Donations and bequests’ in the Annual Information Statement 2014.
  • The ‘Rent income’ is not, as it usually is, the result of owning an investment property, but the accounting for free use of an office. There is a corresponding expense to balance this entry (not shown separately).
  • There is almost no correspondence between the revenue disclosed in Note 2 and the donation options given on the website.

 Employee benefits expense and other associated costs $396K (including Note 3)

  • This amount doesn’t fit with the fact that the charity has 53 full time and 17 part time employees (Annual Information Statement 2014).
  • Note 3 adds nothing. (Nor does it for depreciation).

 Disbursements to missionaries $1.9 m

  • Despite the fact that this item represents 70% of the expenses, there is no Note.

 One Day Project expenses $120K

  • The inclusion of this item means that expense classification is a mixture of nature and function.
  • There is no One Day Project revenue for comparison.

Other expenses from ordinary activities

  • This description implies a possibility of expenses from extraordinary activities. However, this is no longer a distinction in financial reporting.

 What’s left at the end of the year – the Statement of Financial Position (page 6 of the Financial Report)

Cash and cash equivalents $758K (including Note 5)

  • Note 5 just tells us that this was money in the bank.
  • No explanation is given for holding such a large amount.

 Equity $485K (see also the Statement of Changes in Equity)

  • Much more has been transferred to Reserves that was available to transfer.

 Essential information to go with the figures: the Notes to the Financial Statements (page 9 of the Financial Report)

Note 1 Summary of Significant Accounting Policies

  • Missing policy notes:
    • Contingent assets and contingent liabilities
    • New and revised standards – this year
    • Financial instruments
    • Current and non-current classification
    • Trade and other receivables
    • Reserves
    • Operating leases, in the Leases Note
    • Short versus long-term, in the Employee benefits Note
    • A match to the revenues in Note 2, in the Revenue and other income Note
    • Contingent liabilities and contingent assets, in the Provisions Not
  • (m) Provision for fares
    • The consequence of higher risk is an increase to the provision, not a charge to it.
  • (n) Provision for freight
    • This is confusing. Is it saying that the missionaries are charged a certain amount and the company bears the excess or gains the surplus? And that this excess or surplus is added to or subtracted from a previously created provision?
    • It appears that the missionary can be charged more than actual cost.
    • The creation of a provision doesn’t result in any money being created (whether in trust or not).
  • (o) Critical accounting estimates and judgement
    • According to the directors they only make one of these– when to say that donations at churches belong to ACCIM. But this decision is already covered by the routine application of AASB 1004 and described in the policy note on revenue.
    • What about impairment, long service leave, the useful life of assets

Note 3 Expenses from Ordinary Activities

  • The auditor both prepared the financial report and audited it. This is a major threat to independence, so we have to rely on the auditor’s declaration (later) that he complied with his professional code of conduct.

Note 6 Trade and other receivables

  • There is no explanation for why Trade receivables has gone from zero last year to the round amount of $25K this year. What has begun to be sold on credit?
  • There is no explanation for the making of interest-free loans.
  • This is no mention of an allowance for credit losses. 

Note 9 Trade and other payables

  • It is unusual for this size company to not have a single account owing at the end of the year. Especially as there was $32K owing at the same time last year.

Note 12 Reserves

  • These descriptions, both individually, and in combination, are confusing
    • Missionary support reserve: If any funds belong to missionaries then there should be a liability, not a reserve.   There are no funds involved with a reserve anyway.
    • Missionary airfare reserve: As these are payments in advance they should be a liability, not a reserve. Again, the creation of a reserve doesn’t segregate any funds.
  • The first reserve results from ‘funds collected on behalf of missionaries’, the second from ‘funds collected from missionaries’, and the third ‘funds collected for missionaries’, yet they all result in reserves.
  • There is both a provision and a reserve for fares. If there is a liability, there is normally no need for a reserve.
  • If a reserve is thought necessary for ‘missionary support’ and ‘missionary insurance and medical expenses’, why not a provision as well?

Missing Notes

  • Contingent liabilities
  • Capital commitments
  • Post-reporting date events

Membership of accountability organisations, claimed

  • Missions Interlink – half way down here.
    • Not possible to confirm – the membership list is not publicly available.

(End of review)

 

 

 

[i] Formerly Assemblies of God World Missions Inc.

[ii] Australian Charities and Not-for-profits Commission, Australia’s national regulator of charities.

[iii] No articles were found. There are, however, articles, not all favourable, about the Australian Christian Churches/AOG movement.

[iv] The ACNC definition, from their 2014 Annual Information Statement, How to answer the financial information questions, defines ‘Employee expenses’ as

all salaries and wages paid (and payable if using accrual accounting), to all staff employed by your charity on a permanent or casual basis (including replacement staff). It includes leave expenses, termination payments, superannuation, fringe benefits tax, workers’ compensation and other costs relating to paying salaries and wages.’  

This matches the definition in that applies to the Financial Report (AASB 119.8):

Employee benefits are all forms of consideration given by an entity in exchange for service rendered by employees or for the termination of employment.

[v] Defined as “the person appointed under clause 16.1”.

[vi]In the case of the Chairperson of the Board of the Church, if he ceases to hold the office of Chairperson of the Board of the Church [the office of director shall become vacant[.”

[vii] See http://tedsherwood.com/basic-religious-charity-a-justified-exemption/.

[viii] This is how the ACNC explains ‘operating locations’ in their application guide: ‘You need to give details about where in Australia your organisation conducts (or plans to conduct) its activities.’

[ix] Because of the possibility of two (or more) directors having the same name on the register of responsible persons, it is not possible to be definitive about the number of directorships held.

[x] The Australian Christian Churches website confirms that these are one and the same person.

[xi] Even though the missions arm of the AOG became ACCIM, and a new AOG church body, Australian Christian Churches, was formed in 2000, there was also another church body formed using the old name in 2001.

[xii] The company shows 32K of ‘Promotional expenses’. It is possible that it thinks that ‘promotion’ is the synonymous with ‘fundraising’. However, this is not the majority view, and is supported neither by the Accounting for International Development (their Code) nor by the ACNC (their National Standard Chart of Accounts.)

Far East Broadcasting Co (Australia) review

This is a review, for donors, of the Australian charity Far East Broadcasting Co (Australia) (FEBC).   It is structured according to the charity’s entry on the ACNC[i] Register, and its purpose is to supply some information extra to what is there, information that may be helpful in your giving decision.

It is up to you to decide whether any or all of the information presented here is what you need in order to make that decision, and whether you should seek any other information, either from the charity itself or from other sources.

Ministry response:

In addition to comments on particular observations, included after the relevant observation below, the CEO made the following general comments:

  • We will trust the Government department in this and sector wide compliance code and peak body authorities who affirm our diligence and transparency.
  • …as CEO of FEBC I can affirm our staff and Board strive far beyond compliance.
  • Our desire is to utilise the funds we are entrusted with in the best possible way. My own benchmarking for a recent MBA course indicated that we exceed far beyond most (nearly all) in our giving to mission purpose and how admin/fundraising costs.

Organisation of this review:

  1. This review is organised according to the headings in the register entry. This is how to use this section of the review:
    • For each heading in the register entry, first read the information under that heading.
    • Then check if that heading is included below. (Headings for which there is no comment are not included.)
  2. There is then a more detailed comment on the Financial Report.
  3. Lastly, there is a section Membership of accountability organisations claimed.

Sources:

  • ACNC Register (including links)
  • Internet search on ‘Far East Broadcasting Co’, ‘FEBC’, ‘FEBC Overseas Fund‘, ‘FEBC Custodian Limited’, and ‘5 loaves 2 fish’.
  • Far East Broadcasting Co (Australia) website, and Facebook. (Not on LinkedIn.)
  • 5 loaves 2 fish website.
  • State government fundraising licence registers.
  • Email response, on
    • 22 June 2015, from the CEO, to my request for the Auditor’s Report and an Annual Report/Review.
    • 6 July 2015, from the CEO to an invitation to them to comment on my observations in preparation for this post.
  • www.glassdoor.com (two favourable reviews of the US organisation)
  • www.greatnonprofits.org (for the US organisation)
  • www.guidestar.org (for the US organisation)
  • http://apps.charitycommission.gov.uk/showcharity/registerofcharities/RegisterHomePage.aspx (for the UK organisation)
  • https://www.register.charities.govt.nz/CharitiesRegister/Search (for the NZ organisation)

CHARITY DETAILS

Legal Name

  • They also have another registered charity, FEBC Overseas Fund. See the next section.
  • And another ministry, 5 Loaves 2 Fish, which is not a separate charity (nor a business name, and doesn’t have its own ABN).

Charity ABN

Tax deductibility: A tax deduction can be claimed for a donation to FEBC Overseas Fund[ii], but not to FEBC (nor to 5 Loaves 2 Fishes).

  • The FEBC Overseas Fund is a public ancillary fund. Although the FEBC Constitution (see Governing document on the ACNC Register) requires FEBC to establish such a fund, FEBC was not the settlor nor was the named trustee.
    • The named trustee is FEBC Custodian Limited, a separate public company (but not a charity).
      • The CEO (second email) says that ‘FEBC is trustee of FEBC overseas fund’, so there must have been a change in trusteeship since 1.01.2013.
      • This would then explain why FEBC is receiving donations for a fund for which it is not the named trustee.

Charity Street Address

Postal address: PO Box 183 Caringbah NSW 1495

Phone

To fill in the blank, try this one, from the website: 1300 720 017

Website

To fill in the blank, try here: http://www.febc.org.au/.

ANNUAL REPORTING

  • Basic financial information is shown in the AIS 2014. If you think that’s all you might need then this page on the website has the same information but with two helpful charts.
  •  The coverage of finances in this review is left until the financial report proper (below).

CHARITY’S DOCUMENTS

Financial Report

  • This report can be opened either from this section or from within AIS 2014 under Annual Reporting (above).
  • The Financial Report is missing the required Auditor’s Report.
    • In his second email the CEO said that ‘All documents as required by the ACNC are in place.’
  • Although the Financial Report was completed within two months of year end, it was not put on the ACNC Register for another three months. (This was still within the six month period normally allowed.)
  • There is no Annual Report or similar on the ACNC Register. Nor is there one on the website or an invitation to request one.
    • There was no response from the ministry to my request for one.

ABOUT THE CHARITY

Who the Charity Benefits

Mission/vision

From the website:

To bring Christ to the world by media.

We raise prayer, financial, and personnel resources from within Australia to help develop and deliver communications infrastructure and programming so that listeners in communities of need can know the love of God and become followers of Jesus.

Activities

From the AIS 2014:

In the last financial year, FEBC Australia office has worked hard to effectively communicate needs, relay stories, share prayer points and write up project submissions to raise financial support for overseas projects. (The remainder of their description is about the worldwide FEBC ministry rather than Australian activities.)

Results/outcomes/impacts:

  • Unfortunately in the AIS 2014, in response to the request to describe activities and outcomes, there are only activities (see above).
  • I could not find an Annual Report/Review, nor an offer to send one, on the website.
    • There was no response from the ministry to my request for one.
  • This section has some limited information on impacts.

Size of Charity

  • 2013-14 ‘Revenue’ was $1.8 m, easily exceeding the $1 m threshold for the top size of charity.

Financial Year End

  • This means that the next financial report is due by 31 March 2016. Before that the financial information on the Register will be up to 18 months out-of-date.

WHERE THE CHARITY OPERATES

Operating State(s) [iii]

  • No licence to fundraise is held in three of the seven states that have a system of licensing.
    • CEO comment (second email): ‘Charity licence compliant – licence in all states/territories where required or exemption letters from governing bodies where not.’

Operates in (Countries)

  • The Australian FEBC doesn’t actually operate in all these countries, just the two where it has ‘field staff’.
    • The CEO (second email) defended the listing on the grounds that FEBC, as a member of an international association, works in all those countries where the members of that association work.

RESPONSIBLE PERSONS

  • Hall, Johnson and Keegan have been appointed, and Ridge and Leaver have left, since the Directors’ Report was signed on 20.11.2014.
  • Leaver, however, is still a ‘responsible person’ for FEBC Overseas Fund (see first section above and below).
  • To see all a director’s positions in Australia, search here.

FEBC               

  • No. of Australian directorships

Peter ELLIOTT                                                 1?[iv]

Vanessa HALL                                                  1?

Kuet Qeun HO                                                  2

Martin JOHNSON                                           1

Kevin KEEGAN                                                 3

Kenneth KINGWELL                                       1

Rodney TANT                                                    1

 

FEBC Overseas Fund

Kuet Qeun HO                                                   2

Kevin KEEGAN                                                 3

Richard LEAVER                                              2

David ZHENG                                                    2?

  • How this disclosure relates to the fact that the named trustee of the Fund is a separate company, FEBC Custodian Limited, is not disclosed anywhere.
    • The CEO’s second email said that FEBC is the trustee.

(End of review of the ACNC Register information)

 

Latest financial report – detail

  • The presentation is a little confusing because (a) the statements are not presented in the customary order, (b) there are two additional statements.
    • There’s also no audit report and the Notes are not included in the Table of Contents.

Directors’ Report (page 2 of the Financial Report)

  • The following sections, required by law, are missing:
    • Short-term objectives
    • Long-term objectives
    • The strategies to achieve these objectives
    • How the charity measures its performance.
  • The section on the directors is absent the required description of their experience.

What was earned, what was consumed during the year – the Statement of Financial Performance (page 5 of the Financial Report)

  • There is no explanation given for why, given that a Statement of Comprehensive Income is also included (see next), this Statement is included.

Another statement of what was earned, what was consumed during the year – the Statement of Comprehensive Income (page 14 of the Financial Report)

  • No Notes explaining these figures was thought necessary by the company.
  • There is no ‘Other Comprehensive Income’ section.

Income $1.8 m

  • There is no comment in the report on the 23% reduction in ‘Donations and sundry income’.
  • There is no distinction between revenue and other income.
  • Courtesy of the three footnotes, we learn that, because of transfers between line items,
    • Undesignated Donations were actually $672K
    • Project Support was actually $646K
    • Field Staff Support was actually $202K
  • Zero for Project DGR Support implies that nobody wanted a tax deduction.
  • Comparing the income accounts with the 18 donation choices on the website:
    • It is not clear where 5 Loaves 2 Fishes fits
    • Nor ‘Tax deductible J831N Mongolia’ (presumably collecting for the FEBC Overseas Fund.)
    • The FIA code, to which FEBC subscribes, requires a separate account for 5 Loaves 2 Fishes. (And one or more of the other projects?)
  • CEO’s comment on tax deductible projects: “Last year we had no tax deductible projects – as only specific projects qualify and we treat that very seriously – and some things like 5 loaves 2 fish are still in trial phase.’

Interest Received $80K

  • Given the interest recognition policy, it is surprising that this amount, both this year and last, is identical to the cash flow.

 Expenditure $1.9 m

  • If there are ‘office administration’ expenses within the other functional categories, i.e. the sub-totals, then
  • the Notes are absent the required disclosures when using that way of categorising expenses, and
  • there is no single figure for ‘Administration costs’.
  • ‘Fundraising costs’ are not disclosed.

Office Admin Expenses $266K

  • There are two items that are a classification by function rather than the classification ‘by nature’ of the others.

Overseas Project Support $1.2 m

  • Despite this being 65% of the expenses, there is no Note. We are not told where this money went.

Employment expenses $210K

  • This seems a little lean for two full-time and seven part-time employees (the figures at the end of September 2014 according to the AIS 2014). Unless the numbers include the field staff, and then the total would be $444 K.

Surplus/(deficit) for the year $(136K)

  • There is no comment in the report on this deficit.

Where the cash came from, where the cash went – Statement of Cash Flows (page 15 of the Financial Report)

  • Note that last year, financed by donations not passed on to the field, they invested $435K, and that this year they reduced this portfolio by $46K.
  • However, despite a small policy Note with standard wording, investments are not identified in the Statement of Financial Position (see next).

What’s left at the end of the year – Statement of Financial Position (page 7 of the Financial Report)

Receivables $0.5K (including Note 5)

  • There is no explanation why FEBC lent money.
  • Is it to a related party?

Term Deposit $941K (including Note 6)

Financial Assets $818K (including Note 7)

  • No reason is given for holding such a large amount of savings.
  • The same three banks appear under each of these headings, so presumably the only distinction is the maturity of the deposits.
  • The connection between the investments mentioned in the Notes and the Statement of Cash Flows is unstated.

Property, plant and equipment $35K (including Note 8)

  • This is the written down value of two suites in Crusade House. One is the address of the charity; is the other an investment?

Trade & Other Payables $102K (including Note 9)

  • There is no explanation for the very large increase in this liability. (Which is actually $14K larger than this figure – see Employee Benefit Provisions below).

Interest Free Loan $7K (including Note 10)

  • There is no explanation why the charity
    • Lent money
    • Interest free, and
    • Unsecured.
  • Or whether it is to a related party.

Employee Benefit Provisions $43K (including Note 11)

  • This incorrectly includes $14K of deductions from employees not yet handed on.

Settlement Sum for O/S Funds

  • There is no Note explaining this item. (It shouldn’t be the amount required to start the FEBC Overseas Trust because this was paid by someone else.)

Field Staff Provisions $62K (including Note 13)

  • There is no Note explaining these. For instance,
    • Why, given that these are staff of FEBC, the provisions are not included with Employee Benefit Provisions,
    • Why an Emergency Fund is a liability, and
    • How these amounts are calculated.

 Accumulated Funds $1.8 m (including Note 14)

  • There is no Note explaining how these differ from reserves.

Essential information to go with the figures: Notes to and forming part of the Accounts (page 8 of the Financial Report)

  • Note 1 Statement of Significant Accounting Policies 

Basis of Preparation

  • There is no explanation for the decision – a decision that has significant influence on the content of the financial statements – to prepare a special purpose report rather than the expected general purpose one. What the directors are implicitly saying is that ‘there are no users who are dependent on its general purpose reports’, that is, no users who rely, or might in the future rely, on BFA’s financial statements as their major source of financial information. With what must be thousands and thousands of supporters in Australia it is hard to see how the directors could conclude this. (The directors, by their decision, are effectively saying that these supporters have the ability to ask BFA to tailor a report specifically to their needs. This isn’t plausible.)
  • An example of the information that you might not get as a consequence is the relationship that FEBC has with the other FEBC organisations around the world.
  • As FEBC is a not-for-profit entity, and if the directors, as they say they did, followed the Australian Accounting Standards, then their statement that the statements comply with International Reporting Standards is unlikely to be correct.

Missing Notes (in addition to the ones mentioned above)

  • New and revised Standards
  • Accounting Standards issued but not yet adopted
  • Cash and cash equivalents
  • Significant management judgement in applying accounting policies
  • Financial instruments
  • Fair value measurement
  • Related party transactions

FEBC Overseas Fund

  •  Although the FEBC Overseas Fund is required, under its governing document, to produce audited/reviewed accounts, its size of the Fund (‘Small’) means that the only financial information that is available is what the Fund reports in its AIS 2014.   And even though it reported activities for the year, the Fund reports neither revenue nor expenses.

An independent opinion on the financial statements: Independent Auditor’s Report

  • No audit report is included in the financial report. I requested one from the company on 22 June 2015 but after an initial exchange to clear up their misunderstanding, the CEO told me that ‘All documents as required by the ACNC are in place’ (second email).

The ‘Directors’ Declaration’

  • The statements and Notes do not ‘Comply with Accounting Standards’, as the directors assert.

An extra statement, ‘Abridged Accounts’

  • There is no explanation for the inclusion of this statement.

Membership of accountability organisations claimed

  • Missions Interlink Accredited Member.
    • Unfortunately the standards to which they have agreed to adhere are only available by emailing admin@missionsinterlink.org.au.
    • As the membership list is not publicly available, it is not possible to confirm FEBC’s membership.
  • Fundraising Institute of Australia Organisational Member
    • The link goes instead to EA Foundation, the parent of Missions Interlink. It should go to here, which is where you can check the standards with which they must comply.
    • Membership is current.

(End of review)

 

[i] Australian Charities and Not-for-profits Commission, Australia’s national regulator of charities.

[ii] Presumably this is the ‘Tax deductible J831N Mongolia’ option in the Gift Allocation drop-down on the website.

[iii] This is how the ACNC explains ‘operating locations’ in their application guide: ‘You need to give details about where in Australia your organisation conducts (or plans to conduct) its activities.’

[iv] Because of the possibility of two (or more) directors having the same name on the register of responsible persons, it is not possible to be definitive about the number of directorships held.