Morling College Ltd, charity review

This is a charity review, a review for those with an interest in the Australian charity Morling College Ltd (MC).

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 decision about MC.

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, on 14 January 2016, and invited them to comment. They did not respond.

Organisation of this review

  • 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. This also applies to the information in the Financial Report.)
  • There is then a more detailed comment on the Financial Report.
  • Lastly, there is a section Membership of accountability organisations claimed.

Sources

REGISTRATION DETAILS

Entity Subtype

  • The first subtype is consistent with sharing the Gospel. (Even so, MC has deductible gift recipient status (see Charity ABN, below).
  • The ‘Objects’ in the constitution parallel these two subtypes.

CHARITY DETAILS

Legal Name

  • MC is a public company, a company limited by guarantee.
  • Although the fact is not disclosed in the Financial Report, MC is ‘owned’ entirely by the Baptist Union of NSW. It appoints the MC Board.
    • This should mean that that organisation consolidate MC’s financial information with its own when reporting. It doesn’t.
  • Do not confuse MC with these other ‘Morling’ charities, all with the same person as the Charity Address for Service:
    • Morling College (Tinsley Bequest) Limited[ii]
    • Morling Foundation Limited
    • Morling Foundation Public Fund.

Other Name(s)

  • ‘Morling College’ should appear here – although as a trading name it does not entitle MC to use this name (that would require the registration of a business name.)

Charity ABN

  • Tax deductibility: Despite the fact that MC is about advancing Christianity, you can claim a tax deduction for your donation.

Charity Street Address

  • No postal address on the website.

Email

ANNUAL REPORTING

  • AIS 2014
    • This is MC’s compulsory Annual Information Statement 2014 (AIS 2014).
    • It gives basic financial information. However, only three of the 13 figures in this Statement agree with the financial statements[iii].
  • Financial Report 2014
    • The report was signed three months after the year end.
    • It was then lodged three months after that.
    • The coverage of finances in this review is left until the financial report proper (see Latest financial report – detail, below).

ABOUT THE CHARITY

  • Statement of Faith
    • The website directs readers to the website of Baptist Churches of NSW & ACT[iv] for MC’s statement of faith.
      • The redirection is because MC is “the Baptist Bible & Theological college of NSW & ACT.”
    • There is no statement of faith in the constitution.

Date Established

Who the Charity Benefits

  • Vision
    • None found.
  • Mission
    • None found.
    • It’s ‘strategic objectives’ are here.
  • Activities (What did MC do?)
    • From the Description of charity’s activities and outcomes in the AIS 2014:
      • Equipping theological students, teachers and counsellors for Christian ministry, education, community participatation and support services.
  • Outcomes (What did MC deliver?)
    • MC did not respond to the request in the AIS 2014 for a description of its outcomes.
    • None found on the website.
  • Impact (How were people’s lives improved?)
    • Nothing found.

Size of Charity

  • With a revenue of $5.64 m, MC easily qualifies in the largest of the ACNC three size categories (‘Large’).

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

  • MC calls for donations on its website[vi]. It also has two (tax-deductible) appeals on GiveNow for Morling Foundation.
    • It does not hold a fundraising licence in this state, nor in any of the other six that have a licencing regime.
      • Apart from exemptions, whether it needs these licences depends on whether those states think that MC, by calling for donations publicly, are ‘fundraising’ in their State.

CHARITY’S DOCUMENT (SIC)

  • There is no Annual Report/Review available on the ACNC Register.
  • Nor on the MC website.

RESPONSIBLE PERSONS

No. of Australian ‘responsible person’ positions[vii]

Kelvyn Willis                            2

Richard Sindel                         2

Alan Rice                                   5

William Rusin                          3

Brian Powell                             2

William Peirson                       1

Beverley Moore                        1

Stephen Frost                           3

Angelo Gratsounas                  2

Ian Deane                                  2

Trevor Cairney                         7

Peter Adcock                             2

    • The Council is not mentioned on the website.
    • Compared to the situation at 23 March 2015 (the Directors (sic) Report), McCrindle and Powell have joined and a Joshua Thomas has left.

(End of review of the ACNC Register information)

Latest financial report – detail

  • There is no explanation for why the public would be asked to donate to MC when the Morling Foundation exists to support MC and has $20.65 m cash in the bank.

Directors (sic) Report (the first page of the Financial Report)

  • No such report is required by the ACNC.
  • Normally signed by two directors.
  • Missing sections:
    • Performance measures
    • Company secretary
    • Meetings of director
  • Incomplete sections:
    • (1): ‘the qualifications, experience and special responsibilities of each Director’.
    • The time period should be ‘during the whole of the financial year and up to the date of this financial report’.
    • Objectives and strategies: short-term/ long-term split.
  • Sections included but not required:
    • Result and review of Operations
    • Directors’ benefits

Where the directors put their name to the report – the Declaration by Board of Directors (the third page of the Financial Report)

  • Normally signed by two directors.

The Auditor’s Independence Declaration (the third page of the Financial Report

  • The ACNC does not require this to be lodged.

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

  • The auditor says he audited a ‘special purpose financial report’. MC’s report is a general purpose report.
  • He specifies the wrong page numbers for the statements he audited.
  • This is a ‘clean’ opinion.  Read here and here to draw the right conclusions from this.

What was earned, what was consumed during the year – the Statement of Comprehensive Income (the sixth page of the Financial Report)

  • An unusual item of income for $1.38m – 19% of the total – is unexplained.
  • There are no Notes for this Statement.
  • A total for ‘revenue’ should be disclosed.
  • ‘Other comprehensive income’, a required section, is missing.
  • The following expenses are not disclosed:
    • Fundraising
    • Administration
    • Superannuation expense
  • The expenses classification is a mixture of the two permitted methods.
  • The inclusion of both ‘Surplus (Deficit) on operations’ and ‘Operating Surplus for the year’ is confusing – both are the result of ‘operating’.

‘Income’: Where the earnings came from

  • Tuition revenue $3.79 m
    • The policy note uses a different name for this item.
  • Morling College Tinsley Bequest donations $107K, Morling Foundation donations $641K, Other donations $109K
    • Donations total $856K, or 15% of ‘Total income’
    • There is no explanation for why the public would be asked to donate to MC when the Morling Foundation exists to support MC and has $20.65 m cash in the bank.
  • Residential revenue $772K
    • There is no explanation of this term, and no policy note on how it is recognised.
  • Denominational recurrent grants $212K
    • There is no explanation of this item.
    • MC belongs to the Baptist denomination, specifically the Baptist Union of NSW (see Legal Name, above), and Note 1(l) confirms that they are the source of this revenue

‘Expenses’: What was consumed during the period (reordered by size)

  • Employee beneftis $3.59 m
    • Based on the number of employees shown in AIS 2014, and assuming that part-timers work 50% and casual 10% of full-time, this total represents average annual benefits of $90K.
  • Tuition $933K
    • There is no explanation of this large item
  • Other administration costs $480K
    • ‘Other’? Where’s the main lot?
    • There’s no total for administration, and one can’t be calculated.
    • There is no description of what is included in this item.
  • Catering $261K
    • There’s no event income, so what was catered for?
  • Library $74K
    • Why is this not capitalised?
  • Inventory is held but Cost of sales is not shown.

‘Other Items of Comprehensive Income’

  • Reimbursement of Property Development costs $1.38
    • There is no explanation of this substantial item.
    • Who reimbursed MC?
    • An identical amount is shown as Construction in Progress under Freehold Property. Is this a donation?
  • Prior year adjustments $55K
    • There is no explanation for this item.
    • Have the requirements of AASB 1008 been observed?

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

Assets

  • Cash on hand and at bank should be ‘Cash and cash equivalents’, and Receivables should be ‘Trade and other receivables’.
  • Other Receivables $208K (including Note 5)
    • The type of debtor is not idenfifie
  • Fixed Assets $8.58 m (including Note 6)
    • This is an antiquated term.
    • The title of the Note doesn’t match the one in the balance sheet.
    • Not all the assets are ‘freehold property’.
    • The nature of the construction that is in progress is not identified.
    • Why is the land included if the property is leased?
    • The valuation basis for motor vehicles is not disclosed.
    • The required reconciliation of written down values is missing.
    • Neither the nature nor the timing of the valuation of the property is shown.
  • Why is there no asset for the library?

Liabilities

  • Payables $421K, Other Payables $138K
    • This should be ‘Trade and other payables’
  • Deferred Income $365K
    • There is no explanation of this item.
  • Staff Entitlement Provisions $293K (current), $297K (non-current)
    • Do these have the same content as the Accounting Standards’ item ‘employee benefits provision’
  • Morling Foundation Loan $600K
    • There is no explanation of this item.
    • What are the terms?
    • Is the Foundation a related party?
  • Mortgage Loan – interest bearing $651K
    • There is no explanation of this item.
    • What are the terms?
    • Is it from a related party?

Movements in the net wealth of the charity – the Statement of Changes in Equity and Funds (the eighth page of the Financial Report)

  • This is an atypical, and therefore confusing, display.
    • There is no total for either Other Unrestricted Funds or Unrestricted Funds.
    • There is no obvious reason for the distinction between Unrestricted Funds and Other Unrestricted Funds.

Where the cash came from and went to – the Statement of Cashflows (the ninth page of the Financial Report)

  • Funds from/(used in) Operations
    • Tuition Income: this is the third different term for this item.
    • Residential Income:
      • A term slightly different to the one used earlier.
      • Whereas the accrual and cash amounts differ for Tuition Income they don’t for this item.
    • Donations are not shown.
    • Nor is interest.
  • Funds from/(used in) investing activities
    • Prior year adjustments: how did this involve cash?
  • Funds from(used in) financing activities
      • Increase/(Decrease) in borrowings/Increase in Morling Foundation loan
        • The Morling Foundation loan is a borrowing, and therefore should be included in the first item.
      • Why, when the Morling Foundation exists primarily to support MC, is a loan necessary rather than a donation?
  • (a) Funds which may only be used for the designated purpose
    • Given that long service leave is provided by the Baptist Union (Note 1(d), why is there any need for a reserve fund?
    • And even if there is a need, that decision is a choice, not compulsory (i.e. properly in category (b))

Essential information to go with the figures – the Notes to and forming Part of the Accounts (the tenth page of the Financial Report)

  • Missing from the preamble:
    • The type of company that MC is.
    • Functional and presentation currency.
    • The date the accounts were authorised for issue and whether the directors have the p0wer to amend and reissue the financial statements.
  • 1. Significant Accounting Methods and Policies
    • The ACNC Act should be referenced, not the Corporations Act.
    • (a) Recognition of revenue
      • The Note doesn’t match the revenue disclosed.
    • (b) Depreciation
      • This should be Property Plant & Equipment
      • The third sentence doesn’t make sense.
      • There is no mention of the Construction in Progress.
      • The depreciation method is not disclosed.
      • No rate is shown for leasehold improvements.
      • Policies on derecognition and the review of depreciation factors are missing.
    • (d) Employee Benefits
      • The usual distinction between short-term and long-term benefits is missing.
    • (f) Designated Funds
      • The third sentence implies that designated funds are not revenue, a practice that would be contrary to the Accounting Standards.
      • The last sentence implies that unrestricted designated funds are held outside MC, again a practice that would be unlawful.
    • (m) Secured loan – interest bearing
      • There is no ‘loan provided by Baptist Financial Services Australia Ltd’ in the balance sheet.
      • The remainder of the note is about a property, not the loan, and should be included under Note (b).
      • The property is not identifiable in the balance sheet.
    • Missing policy Notes
      • New, revised or amending Accounting Standards and Interpretations adopted
      • Current and non-current classification
      • Cash and cash equivalents
      • Trade and other receivables
      • Impairment of non-financial assets
      • Trade and other payables
      • Fair value measurement
      • Goods and services tax (GST) and other similar taxes
      • Critical accounting judgments, estimates and assumptions
  • 8. Related Parties
    • The nature of the relationship with The Baptist Union is not identified.
    • The MC constitution shows that the Union controls MC. (For some reason, though, it does not consolidate MC’s figures with its figures.)
    • The two units that are owned by the Union but used by MC are not mentioned.
    • What is the value of the ‘administrative assistance’ provided by The Baptist Union?
    • The nature of the relationship with Morling College (Tinsley Bequest) Limited is not identified.
    • Does this company pay rent?
    • The nature of the relationship with Baptist Financial Services Limited is not identified.
    • Nor is it for Morling Foundation Limited.
    • A listing of the directors is incomplete as a disclosure of ‘key management personnel’ disclosures.
    • Isn’t there also a relationship with College of Christian Higher Education Incorporated?
  • 12 Economic Dependency
    • This Note contradicts Note 1(l).
  • 13 Secured Loan
    • This Note duplicates Note 1(m).
    • The last sentence doesn’t make sense.
  • Missing Notes
    • Contingent Liabilities
      • Don’t student fees have to be repaid under certain circumstances?
    • Commitments

Membership of accountability organisations claimed

 

(End of review)

 

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

[ii] The registration of yet another Morling charity, The Trustee for Morling College Tinsley Bequest, was revoked by the ACNC during the year because it has not submitted an AIS for the last two years.

[iii] And the year end is 31 December 2014, not 2013.

[iv] This is not a charity, but a business name of the charity Baptist Union Of New South Wales.

[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] There is no separate page for two of the menu items ‘Donations’ and ‘Bequests’. They both lead to another of the menu items, ‘Partnership Mission’.

[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.

Ridley College, charity review

This is a charity review, a review for those with an interest in the Australian charity Ridley College (RC).

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 decision about RC.

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, on 13 January 2016, and invited them to comment. This was their comment for publication: “Ridley College will give consideration to your observations.”

Organisation of this review

  • 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. This also applies to the Financial Report.)
  • There is then a more detailed comment on the Financial Report.
  • Lastly, there is a section Membership of accountability organisations claimed.

Sources

REGISTRATION DETAILS

Entity Subtype

  • The first subtype is consistent with sharing the Gospel. (Even so, RC has deductible gift recipient status (see Charity ABN, below).
  • The ‘Objects’ in the constitution parallel these two subtypes, but with a narrowing to the Anglican way:
    • To provide Theological training in accordance with the Constructive and Evangelical Principles of the Reformation Settlement of the Church of England (sic) for students who are seeking Holy Orders or preparing for Mission Work (sic) or other Christian ministry [paragraph 4.1].
      • There is no one document with this title, so paragraph 5.2 spells out what is meant:
        • For the removal of doubt it is declared that the Constructive and Evangelical Principles of the Reformation Settlement of the Church of England are embodied in the Book of Common Prayer of 1662 together with the form and manner of making, ordaining and consecrating Bishops, Priests and Deacons and in the Articles of Religion.

CHARITY DETAILS

Legal Name

  • Between 2007 and December 2015 its name was Ridley Melbourne.
    • This name, or a variation of it, is still being used on the website of one of RC’s ministries, Marketplace Institute (see just below).
  • RC is a public company, a company limited by guarantee.
  • It is entitled to omit ‘Ltd’ (or ‘Limited’) on the end of its name.

Other Name(s)

  • They do not need the first of these names (see Legal Name, above).
  • RC has another name that it presents to the public: Marketplace Institute.
    • Whether it needs to register this name depends on whether RC is entitled to an ABN for this activity (Regulatory Guide 235, www.asic.gov.au). Apart from having its own website, the fact that it calls RC a ‘partner’ and conducts events in its own name is evidence that it is so entitled.

Charity ABN

  • Tax deductibility: Despite the fact that RC is about advancing Christianity, you can claim a tax deduction for your donation.

Charity Street Address

  • No separate postal address on the website.

Phone

  • From the website (below the white space on the contact form): 03 9207 4800.

Website

  • From a Google search: www.ridley.edu.au

ANNUAL REPORTING

  • AIS 2014
    • This is RC’s compulsory Annual Information Statement 2014 (AIS 2014).
    • It gives basic financial information. However,
      • None of the income figures match the income statement, and the total is slightly overstated (by $100K).
      • ‘Employee expenses’ is slightly understated (by $31K).
      • The zero interest cannot be confirmed because the mandatory ‘Finance costs’ is not shown in the income statement.
      • Total expenses is overstated by the same amount as Total Gross Income.
      • The Balance Sheet Extract matches the balance sheet except for a $30 transcription error.
    • There is also basic income statement information in the Community Report 2014 (see Charity’s Document (sic), below). However
      • It reports the income statement’s $263K ‘Surplus for the year’ as a ‘profit’ of only $2,491.
      • Only one of the nine figures explaining that surplus matches what is shown in the income statement.
  • Financial Report 2014
    • The report was signed three and a half months after the year end.
    • It was then lodged 10 weeks after that.
    • The coverage of finances in this review is left until the financial report proper (see Latest financial report – detail, below).

ABOUT THE CHARITY

  • Statement of Faith
    • Called their ‘Theological Framework’:
      • Ridley College is committed to academically rigorous theological training in the Anglican, Reformed and Evangelical tradition that engages seriously with contemporary culture.
    • See Entity Subtype, above.

Date Established

Who the Charity Benefits

  • Vision
      • To be a leading centre of mission and ministry training delivered in supportive communities through flexible study modes.
  • Mission
    • ‘Equipping men and women for God’s mission in a rapidly changing and increasingly complex world.’
  • Activities (What did RC do?)
    • From the Description of charity’s activities and outcomes in the AIS 2014:
      • Provides Theological Education.
        • Although there is nothing in the AIS 2014 (nor on the Register) to tell the reader the source of this theology, the constitution shows that RC is effectively controlled by the Anglican church (see Entity Subtype, above). And the Christian community knows that it is Anglican.
  • Outcomes (What did RC deliver?)
    • RC did not respond to the request in the AIS 2014 for a description of its outcomes.
    • None found on the website.
  • Impact (How were people’s lives improved?)
    • Nothing found.

Size of Charity

  • With a revenue of $3.92 m, RC easily qualifies in the largest of the ACNC three size categories (‘Large’).

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)[ii]

  • It does not hold a fundraising licence in this state. Tertiary education institutions are exempt.
  • Nor does it have a licence in any of the other six that have a licencing regime.
    • Whether it needs these licences depends on, other than an exemption, whether those states think that RC, by calling for donations publicly (on its website), are ‘fundraising’ in their State.

CHARITY’S DOCUMENT (SIC)

  • There is no Annual Report/Review available on the ACNC Register.
  • But there is one on the website (bottom half, here).

RESPONSIBLE PERSONS

No. of Australian ‘responsible person’ positions[iii]

Geoffrey Buchanan                 1

Mark Chew                               2

Ian Harper                                1

Sandra Jones                            4

Moana Overton                        1

Brian Rosner                            2

David Williams                        30

Claire Rogers                            1

Jonathan Kuan                        1

Timothy Johnson                    3

Stephen Hale                            10 (with one duplicate)

Andrew Canobi                        1

Gregory Baxter                        1

  • With the exception of the Principal, Brian Rosner, this listing matches the one on the website.
  • The Board are the members, and the members are the Board. The Board is therefore effectively appointed by the Board.
  • The constitution requires the Board to ‘use its best endeavours to ensure that the Board, excluding the Principal, contains 8.4.1 five persons who are Clergy of the Anglican Church [8.4]. Assuming that those with the title ‘Rev’ on the website are Anglican, the website shows four, not five.
  • From the Directors’ report, and reported here, Buchanan, Kuan, and Chew joined the board since the beginning of the year, and nobody left.
  • The constitution requires that the Principal be an Anglican priest [10.2.1].

(End of review of the ACNC Register information)

Latest financial report – detail

  • The directors’ belief that RC is not a ‘reporting entity’, a choice that allows them to make less than a full disclosure about RC’s finances and operations, seems to be a clear contravention of their claim that the accounts show a ‘true and fair view’.
    • Given that industry expert Carmen Ridley says that it is difficult for a NFP to be other than a reporting entity[iv] the directors’ give insufficient evidence to support their claim, the claim, effectively, that a large tertiary college that seeks donations from the public is willing to tailor a financial report for anybody who requested one.
    • What, for instance, is the difference between RC’s situation and that of Morling College?

Directors’ report (page 1 of the Financial Report)

  • Despite the claim in the preamble, no such report is required by the ACNC.
  • Missing sections:
    • Objectives (split between short-term and long-term)
    • Strategies for achieving the objectives
    • Performance measures
  • Incomplete sections
    • Information on directors: no experience and expertise.
  • Sections not required:
    • Mission
    • Values
    • Change of Name
    • Review of operations
    • Supporters
    • Change in state of affairs
    • Subsequent events (should be in the Notes)
    • Future developments
    • Environmental regulations
    • Dividends
    • Indemnification of officers and auditors
    • Proceedings on behalf of the company
    • Auditor’s independence declaration

Auditor’s Independence Declaration… (page 5 of the Financial Report)

  • The ACNC does not require this to be lodged.

An independent opinion on the financial statements – the Independent Auditor’s Report (page 6 of the Financial Report)

  • 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’ (page 8 of the Financial Report)

  • See Latest financial report – detail, above.

What was earned, what was consumed during the year – the Statement of comprehensive income (page 9 of the Financial Report)

  • The inclusion of three columns in addition to the statement figures for RC is non-standard.
  • And it would be more helpful to have the statement figures first, not last.
  • As the meaning of the three columns, ‘Operations’, ‘Foundation’ and ‘Other’, is far from obvious, an explanation is needed on the first page.
    • It is not until the Notes that you will see such an explanation. (And then it’s confusing.)
    • The explanation of ‘Operations’ also applies to the figures in the ‘Foundation’ column [Note 3(o)]. There is no definition of ‘Operations’.
    • Despite the inclusion of ‘Ridley’, and use of the term ‘Foundation’, the ‘Ridley Foundation Fund’ is not an entity separate to Ridley, not a foundation as the term is usually used. It is just a separation of some of RC’s own money.
    • With the explanation of ‘Other’, it is not obvious what adjustments were ‘required to comply with the Australian Accounting Standards in relation to revenue and expenses incurred in the period’?
  • The third item in the calculation of surplus, ‘Distribution’, is not consistent with the Accounting Standards, distributions normally occurring post-surplus.
    • The term is unexplained here.
    • And could still be clearer after being described as ‘Contribution to the principal activities’ later in Note 17 (‘Ridley Foundation Fund’).
  • The other comprehensive income item is not classified as to whether it will subsequently be transferred to profit or loss.
  • The expenses are, contrary to the Accounting Standards, a mixture of the two permissible classifications.
  • The following expenses are not disclosed:
    • ‘Finance costs’
    • Fundraising
    • Administration
    • Superannuation expense
    • Cost of sales (for the ‘Hire of facilities & Catering’ revenue)

Where the earnings came from – Revenue (including Note 4, reordered for size)

  • Theological fees $2.00 m
    • an unusual term that presumably refers to fees from students;
    • 51% of ‘Revenue’.
  • Donations: $619K, Appeal Donations $130K, Bequests $11K, Trusts and scholarships $208K = $969K
    • The last item is not explained, but RC have included it in ‘Donations and bequests’ in their AIS 2014
    • Were all donors aware that RC had $11.04 m invested?
  • Dividends and managed fund distributions $530K
    • Presumably the return on the $8.2 m ‘Investment funds’ held (Note 7).
  • Interest $115K
    • Presumably the return on the $2.84 m held in term deposits.
  • Rental income $114K
    • What is being rented is not stated. There is no investment property on the balance sheet.
  • Ordinand grant $90K
    • There is no explanation of this unusual term.
      • An ordinand is a candidate for ordination, where ordination, for Ridley, is the Anglican process that makes someone a bishop, priest or deacon.
    • It appears that it is something received each year. But from whom?
  • Event revenue $32K
    • Presumably this is from things similar to these.

What was consumed during the period (reordered by size)

  • Employees $2.21
    • Presumably this matches the Accounting Standards definition of ‘employee benefits expense’.
    • Assuming that the part-time and casual employees identified in the AIS 2014 work 50% and 10% of full-time respectively, this represents average benefits per employee of $116K p.a.
  • Property & utilities $237K
    • Despite the Note 3(o), it is not obvious why the figure for ‘Operations’ needed to be increased by $15K to get the figure to be reported.
      • The same applies to the other items with figures in the ‘Other’ column.
  • Tours $191K
    • There is no explanation of this item.
  • ACT administration fees $178
    • There is no explanation of this unusual term.
      • A search of the website shows that it is a fee paid to the Australian College of Theology.
  • Impairment $118
    • See Note 1(h) for an explanation of ‘impairment’.
  • Catering $105K
    • Presumably this is for the events (see above).
  • Events $49K
    • Adding this to Catering (above) means that RC’s events ran at a loss, before any other direct expenses and a share of overhead, of $122K.

What’s left at the end of the year – the Statement of financial position (page 10 of the Financial Report)

  • Other financial assets $2.84K (current), $8.20 m (non-current) (including Note 7)
    • There is no explanation for why, with this much invested, there is a call for donations.
  • Property, plant and equipment $1.44m (including Note 8)
    • There is no explanation of ‘Improvements’.
    • Why is the library not included?
    • There are neither leased motor vehicles or those that are owned.
    • The usual reconciliations are missing.
  • Reserves $11.83 m (including Note 14
    • There is no distinction between restricted and unrestricted reserves.
    • ‘Financial instrument reserves’ has a different name in Note 3.

Movements in the net wealth of the charity – the Statement of changes in equity (page 11 of the Financial Report)

  • Although not obvious here, the third column, ‘Financial instrument reserve’, is the same thing as the ‘investments revaluation reserve” described in Note 3(f) ‘AFS financial assets’.

Where the cash came from and went to – the Statement of cash flows (page 12 of the Financial Report)

  • There was a reduction in borrowings. Why then is there no Cash flows from financing activities section?
  • Cash flows from operating activities
    • Receipts from student fees $2.08 m: a different name is used in the income statement.
    • Receipts from donations, bequests and other sources $1.29 m
      • This does not match the grouping elsewhere
  • Cash flows from investing activities
    • Proceeds from investments $500K
      • This terminology does not match the policy note on financial assets (Note 3(f)).
    • Net amounts withdrawn from term deposits
      • The figure represents an addition to term deposits, not a withdrawal.
      • This terminology does not match the policy note on financial assets (Note 3(f)).

Essential information to go with the figures – the Notes to the financial statements (see the header) (page 13 of the Financial Report)

  • 1. General Information
    • Missing: the date of issue of the report and whether the directors have the power to amend and reissue the financial statements.
  • 3. Significant accounting policies
    • The directors say the company is a ‘not a reporting entity’ because ‘there are unlikely to exist users of the financial statements who are unable to command the preparation of reports tailored so as to satisfy specifically all of their information needs’.
      • It is very hard to believe that the 800+ Ridley Certificate users for instance can each order a financial report from RC. But that is what the directors are saying.
      • The result of the decision is that the accounts don’t comply with the Australian Accounting Standards, and can disclose considerably less than that required for a general purpose report, a report designed for those people who are dependent on the charity’s report for the information they need.
      • You can compare the directors’ decision to this advice from the ACNC:
        • If people use and rely on your charity’s financial statements to help them make decisions (for example, about how to spend money) then your charity is most likely a reporting entity.
          • Although not clear from this, the directors should also consider prospective users.
    • Some of the Accounting Standards required by the ACNC have not been followed.
    • Is it really the case that there are no accounting estimates, judgements and assumptions that have a significant risk of causing a material adjustment to the figures in the next year?
    • (a) Borrowing costs
      • With no major construction underway, and millions in the bank, why would ‘borrowing costs’ be relevant?
    • (b) Cash and cash equivalents
      • What deposits for a term fit within this definition?
      • A policy on bank overdrafts is not relevant.
    • (f) Financial assets
      • ‘Financial assets at FVTPL’ is not the accepted term
      • ‘Held-to-maturity investments’: this information does not match what RC holds.
      • ‘AFS financial assets’ is not the accepted term.
      • The ‘investments revaluation reserve’ has a different name in the balance sheet.
    • (j) Leasing
      • The policy on finance lease accounting is not relevant.
    • (k) Property, plant and equipment
      • The depreciation method is not disclosed.
      • ‘Improvements’ to what?
    • (n) Revenue recognition
      • What goods are sold?
      • What services are rendered?
      • The policy for rental income is not disclosed.
      • What is the policy for fees paid in advance?
    • (o) Revenue & Expense Analysis
      • See the third point under What was earned…, above.
  • Missing policy Notes
    • Current and non-current classification
    • New, revised or amending Accounting Standards and Interpretations adopted
    • Trade and other payables
    • Trade and other receivables
    • Fair value measurement
  • Note 16 Remuneration of auditors
    • The fact that the auditor assisted in the preparation of the financial report is a threat to his independence
  • Note 19 Contingent liabilities and capital commitments
    • Don’t student fees have to be repaid under certain circumstances?

Membership of accountability organisations claimed

  • RC claims Missions Interlink as a partner, but not as an organisation offering accountability. RC is, however, a member (with its attendant responsibilities).

 

(End of review)

 

 

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

[ii] 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.’

[iii] 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.

[iv] FastClass: Annual financial statements for NFP – Online, www.cpaaustralia.com.au, accessed December 2015.

Tahlee Bible College, charity review

This is a charity review, a review for those with an interest in the Australian charity Tahlee Bible College (TBC).

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 decision about TBC.

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[ii], on 13 January 2016, and invited them to comment. They did not respond.

Organisation of this review

  • 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.)
  • Lastly, there is a section Membership of accountability organisations claimed.

Sources

  • ACNC Register (including links)
  • Google search on the charity’s names (see Legal Name, below)
  • TBC website.
  • Facebook: TBC, and Tahlee Ministries Inc (see Legal Name, below) calling itself ‘Tahlee’. Not on LinkedIn.
  • State government fundraising licence registers.
  • www.glassdoor.com.au

REGISTRATION DETAILS

Entity Subtype

  • TBC is very late in selecting a subtype.
  • The organisation’s objects cannot be checked because no constitution has been lodged by TBC.

AIS 2014 Overdue by 6 months

  • Here are the consequences of it being this much overdue.

CHARITY DETAILS

Legal Name

  • Although TBC is legally registered as a charity with the ACNC, it is not a separate legal entity; that is, it is an unincorporated entity. (This means that it must act through its members.)

Other Name(s)

  • This is incorrect. This is neither a trading name or business name of TBC.
  • Tahlee Ministries Incorporated (TM) is a legal entity in its own right, a NSW incorporated association with registration current (Y2385129).
  • It is also a charity. A charity with the same Charity Address for Service, Website, and Phone as TBC (see below).
    • TM appears to be holding out that TBC belongs to it.
    • However, even though TM shows TBC as a trading or business name, this is incorrect.
    • TM’s AIS 2014 is also ‘Overdue by 6 months.
    • Two other charities record (incorrectly) TM under ‘Other Name(s), and have the same Charity Address for Service, Website, and Phone as TBC (see below):
      • Gospel Service Ministries Inc.
      • Port Stephens College
  • Gospel Service Ministries Inc.
    • is also ‘Overdue by 6 months.
    • According to TBC’s website (actually a website in TM’s name), Gospel Service Ministries changed its name to TM in 2004.
    • The official record (see Charity ABN, below) says differently: from inception on 1 November 1999 there was only a change in the suffix from ‘Pty Ltd’ to ‘Inc.’ (in 2000).
    • The name change that it is referring to is most likely the one shown on the similar record for TM: from Gospel Service Ministries Inc Headquarters to TM in August 2004.
  • Port Stephens College
    • is also ‘Overdue by 6 months.
  • There is yet another charity that has TM as its Charity Address for Service: an unincorporated entity called Tahlee Ministries Incorporated – Riverview Camp Centre.
    • This one, like the others, is overdue in submitting its AIS 2014 (by 11 months); however, it, unlike the others, has yet to submit its AIS 2013 – it is Overdue by 21 months.

Charity ABN

  • Tax deductibility: Although TBC itself doesn’t have deductible gift recipient status, it operates two funds that do. A donation to either of these funds would therefore allow you to claim a tax deduction.

Charity Street Address

  • Postal address, from the website: Locked Bag 1 Karuah, NSW 2324.

ANNUAL REPORTING

  • AIS 2014
    • This is TBC’s compulsory Annual Information Statement 2014 (AIS 2014). Very overdue.
  • Financial Report 2014
    • This is lodged with the AIS 2014 (see above), and is therefore also not available.
      • If the financial statements have been lodged with Fair Trading (NSW Government), you can pay for a copy.

ABOUT THE CHARITY

  • Statement of Faith
    • The constitution cannot be checked for such a statement because no constitution has been lodged by TBC.

Date Established

Who the Charity Benefits

  • Vision
    • None found.
  • Activities (What did TBC do?)
    • From Description of charity’s activities and outcomes in the AIS 2013 (AIS 2014 not yet submitted):
      • Offering training, religious education, camps
    • From the website: accommodation, and ‘training and education’.
    • The National Education Directory of Australia has an entry for TBC. Including a logo.
    • The contact information is correct but the CRICOS Provider Number is no longer valid.
    • This directory seems to be more up-to-date.
  • Outcomes (What did TBC deliver?)
    • TBC did not respond to the request in the AIS 2013 (2014 not yet submitted) for a description of its outcomes.
    • None found on the website.
  • Impact (How were people’s lives improved?)
    • Nothing found.

Size of Charity

  • There are no revenue figures on the register to confirm this declared size.
  • TBC is Small, but if it is combined with any of the others that are separate to TBC – Medium for TM and Gospel Service Ministries, Small for Port Stephens College and an unknown size for TM – Riverview Camp Centre – maybe the group is Large? Especially as the Register information is well out-of-date.

Financial Year End

  • This means that the next report (after 2014 is submitted) is due by the end of January 2016.
  • If the 2014 report is submitted this month, the information will be up to 18 months out-of-date.

WHERE THE CHARITY OPERATES

Operating State(s)[iii]

  • TBC does not hold a fundraising licence in this state, nor in any of the other six that have a licensing regime. TM is exempt.
    • Whether the operating charity is TBC or TM, its need for these licences depends on whether those states think that, by calling for donations publicly, it is ‘fundraising’ in their State.

CHARITY’S DOCUMENT (SIC)

  • There is no Annual Report/Review available on the ACNC Register.
  • Nor on the TBC website.

RESPONSIBLE PERSONS

  • It is compulsory to disclose the names of these people.
  • There is also no information on the website about the board or committee.
  • It appears from this that John Anderson (Rev), and Ron and Pam Schravemade are the main players.
    • John Anderson is part of the National Leadership Team and on the board of Missions Interlink (Australian Evangelical Alliance) (see below).
  • For the incorporated bodies (see Legal Name, above), the names of the committee members should be available from the applicable state body.

(End of review of the ACNC Register information)

 

Membership of accountability organisations claimed

  • None claimed. Tahlee Ministries Inc. (not TBC) is, however, a member of Missions Interlink.  And John Anderson (see Responsible Persons) is part of the team that runs Missions Interlink.

 

(End of review)

 

 

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

[ii] Using the email address(es) on the Register.

[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.’

Bible College of Queensland, charity review

This is a charity review, a review for those with an interest in the Australian charity Bible College of Queensland (BCQ).

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 to you in your decision about BCQ.

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, on 23 December 2015, and invited them to comment. They did not respond.

Organisation of this review

  • 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. This also applies to the Financial Report.)
  • There is then a more detailed comment on the Financial Report.
  • Lastly, there is a section Membership of accountability organisations claimed.

Sources

  • ACNC Register (including links)
  • Google search on the charity’s names (see Charity Details, below).
  • BCQ website. BCQ on Facebook. Plus BCQ on LinkedIn.
  • State government fundraising licence registers.
  • www.glassdoor.com

REGISTRATION DETAILS

Entity Subtype

  • As expected for a bible college, a subtype consistent with sharing the Gospel.
  • The company’s principal object is also about ‘advancing religion’:
    • The Company’s principal object is to establish, maintain and conduct colleges where students may obtain a sound Christian religious education.

CHARITY DETAILS

Legal Name

  • BCQ is a public company, a company limited by guarantee.
  • It is permitted to omit ‘Ltd’ on the end of its name.

Other Name(s)

  • Former names: Crossway College, Bible College of Queensland, Queensland Bible Institute[ii].

Charity ABN

  • Tax deductibility: You can claim a tax deduction for a donation to BCQ.
  • As you can for a donation to either of its two funds, Qld Bible Institute College Building & Maintenance Account, and Bible College of Queensland Library Fund.

Charity Address for Service

  • I have no reason to believe that this doesn’t work.

Charity Street Address

  • No postal address on the website.

Email

  • I have no reason to believe that this doesn’t work.

Phone

  • Try this one, from the website: (07) 3870 8355

Website

ANNUAL REPORTING

  • AIS 2014
    • This is BCQ’s compulsory Annual Information Statement 2014 (AIS 2014).
      • It gives basic financial information. If you think that this is sufficient for you, please note:
        • ‘Donations and bequests’ should be $41,179, not zero.
        • Special purpose financial statements not ‘Transitional financial statements’ were submitted.
  • Financial Report 2014
    • The report was signed two months after the year end.
    • It was then lodged one month after that.
    • The coverage of finances in this review is left until the financial report proper (see Latest financial report – detail, below).

ABOUT THE CHARITY

  • Statement of Faith
    • What beliefs motivate and guide us, half way down here.
    • There is no statement of faith, or similar, in the BCQ constitution.

Date Established

  • The last two sections here give a brief history.
  • Wikipedia has a very short unofficial history.
  • For the keen, here’s a whole book on the history of BCQ before it was BCQ.

Who the Charity Benefits

  • Vision and Mission
    • None found.
    • This is their What we want our students to do:
      • Know God’s word; take it to the world.
    • And this is their How we make that happen:
      • By offering high-quality, Bible centred theological training in a diverse and supportive community, shaping the whole person for God’s purposes. Aiming for more than simply growing students’ knowledge of theology, we’re developing passionate, capable disciples who use what they know about God’s word to serve him in the church and the world.
  • Activities (What did BCQ do?)
    • From the Description of charity’s activities and outcomes in the AIS 2014:
      • We provided higher education in the Christian faith at undergraduate and post graduate level.
  • Outcomes (What did BCQ deliver?)
    • BCQ did not respond to the request in the AIS 2014 for a description of its outcomes.
    • Nothing found on the website.
  • Impact (How were people’s lives improved?)
    • Nothing found.

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)[iii]
    • BCQ holds a fundraising licence in its home state.
    • Whether it needs one in the other six states depends on whether those states think that BCQ, by calling for donations on their website, are ‘fundraising’ in their State.

Size of Charity

  • With a revenue of $1.28 m, BCQ is just over the threshold for the largest of the ACNC three size categories (‘Large’).

CHARITY’S DOCUMENT (SIC)

  • There is no Annual Report/Review available on the ACNC Register.
  • Nor on the BCQ website.

RESPONSIBLE PERSONS

No. of Australian ‘responsible person’ positions[iv]

Neil Conwell                                3

Leon Ghavalas                             1

Terence Leister                            1

Robert Paech                               1

Megan Verhoef                            2

Elizabeth Stoltz                           2

Samuel McGeown                       1

Richard Gibson                            1

Peter Farrington                          2

Ian Case                                         1

  • This listing matches that on the website.
  • But differs from the position at 27 February 2015 shown in the Directors’ Report:
    • Richard Coulson, Maxwell Hardy, Rhys Morgan, and James Shanks are no longer on the board.
    • Ghavalas, Leister, and Verhoef have been appointed since.
  • There is a short biography on the current directors available by clicking on their name in the above link.

(End of review of the ACNC Register information)

 

Latest financial report – detail

  • The directors’ belief that BCQ is not a ‘reporting entity’, a choice that allows them to make less than a full disclosure about BCQ’s finances and operations, seems to be a clear contravention of their claim that the accounts show a ‘true and fair view’.
    • Given that industry expert Carmen Ridley says that it is difficult for a NFP to be other than a reporting entity[v] the directors’ give insufficient evidence to rebut the presumption that a college with hundreds of students and staff, and that seeks donations from the public, would not be willing to tailor a financial report for anybody who requested one.
    • What, for instance, is the difference between BCQ’s situation and that of Morling College?

Directors’ Report (page 2 of the Financial Report)

  • No such report is required by the ACNC.
  • Missing section: Objectives
  • Incomplete sections: ‘Performance measures’ (what are they?), and ‘Directors’ (their experience)

What was earned, what was consumed during the year – the Statement of Comprehensive Income (page 4 of the Financial Report)

  • The following expenses are not disclosed:
    • Administration
    • ‘Finance costs’
    • Fundraising?
    • Superannuation expense

Where the earnings came from (including Note 2)

  • Student fees, board, functions $1.09 m comprise 86% of income.
  • The next largest source is Rental of communication tower $110K, 9%.
    • An unusual item, yet no explanation. Presumably the tower is not owned by BCQ.
  • Donations $41K: why is zero shown in the AIS 2014 for ‘Donations and bequests?
  • Interest received $19K
    • This should be ‘Interest revenue’.
    • Why is interest not accrued?

What was consumed during the period (reordered by size)

  • Employee benefits expense $872K
    • From the workforce disclosed in the AIS 2014, and assuming the casuals average 10% of full-time and the part-timers 50%, this represents an average package of $68K p.a.
  • Other expenses from ordinary activities $365K
    • Other than $6K for the auditor, we are not told what is in this figure.

What’s left at the end of the year – the Statement of Financial Position (page 5 of the Financial Report)

Assets

  • Cash and cash equivalents $603K (including Note 3)
    • Gift fund $28K: BCQ has two tax deductible funds. Each should be shown.
  • Accounts receivable and other debtors <$1k (including Note 4)
    • Where’s GST receivable? (GST payable is zero
  • Property, plant and equipment $6.24 m (including Note 6)
    • Freehold land $5.37 m
      • The valuation is out-of-date.
    • Buildings $163K
      • The valuation is out-of-date
    • Building improvements $277K
      • Why are these separate from ‘Buildings’?
    • Building development costs $5K:
      • Why are these separate to ‘Buildings’ and ‘Building improvements’?
      • Why is the disclosure different from Buildings’ and ‘Building improvements’?
    • Plant and Equipment $33K
      • What type of ‘plant and equipment’? All the rest are itemised.          
  • Reserves $6.24 m (including Note 9)
    • There is no explanation for the reduction in the ‘Asset revaluation reserve’.

Liabilities

  • Accounts Payable and other payables $170K (including Note 7)
    • Exempt benefit balances $48K: There is no explanation of this unusual item.

Where the cash came from and went to – the Statement of Cash Flows (page 7 of the Financial Report)

  • Cash Flow From (sic) Operating Activities
    • No donations and bequests are shown
  • Cash flows (sic) used in Financing Activities
    • Why is the reduction in borrowings not shown?

Essential information to go with the figures – the Notes to the Financial Statements – page 8 of the financial report

  • Missing from the preamble
    • Whether the directors have the power to amend and reissue the financial statements
    • Functional and presentation currency
    • Registered office and principal place of business.
  • Note 1   Summary of Significant Accounting Policies
    • The directors say the company is a ‘not a reporting entity’, ‘because there are no users who are dependent on its general purpose financial statements’.
      • They are in effect saying that anybody who is interested in this company has the power to contact the company and request a report tailored to their particular needs. This is highly unlikely and there is no such invitation on the website.
        • This is despite the fact that BCQ has hundreds of students and staff and has, on the internet, a standing invitation to donate.
      • The result of the decision is that the accounts don’t comply with the Australian Accounting Standards, and can disclose considerably less than that required for a general purpose report, a report designed for those people who are dependent on the charity’s report for the information they need.
      • You can compare the directors’ decision to this advice from the ACNC:
        • If people use and rely on your charity’s financial statements to help them make decisions (for example, about how to spend money) then your charity is most likely a reporting entity.
          • Although not clear from this, the directors should also consider prospective users.
    • The specific Accounting Standards that were followed are not disclosed
    • a. Revenue
      • The policy on the main revenue item, fees, is not disclosed.
      • BCQ doesn’t receive any grants, so the policy is not relevant.
      • Why, if accrual accounting is being used, is interest only recognised when it is received?
      • What revenue is earned from delivering a ‘service’ to ‘customers’?
    • b. Accounts Receivable and Other Debtors
      • Fees outstanding are not mentioned.
      • If donations and bequests are recognised on receipt (see a. Revenue), how can there be debtors?
      • BCQ doesn’t receive grants so there shouldn’t be any grants receivable.
    • c. Property, Plant and Equipment
      • Buildings are not Plant and equipment.
      • The policy on write downs is duplicated.
      • The policy on derecognition is not disclosed.
      • The listing of depreciation rates does not match the assets held.
    • e. Employee provisions
      • These are not shown, as claimed, as ‘accounts payable…’ in the ‘statement of financial positions’.
    • f.   Cash and Cash Equivalents
      • There is no bank overdraft, so no need for a policy.
    • g.   Goods and Services Tax (GST)
      • The policy on commitments and contingencies is missing.
    • k. Critical Accounting Estimates and Judgements
      • None are disclosed.
    • Missing policy Notes:
      • Current and non-current classification
      • Fair value measurement
      • New, revised or amending Accounting Standards and Interpretations adopted
  • Note 6: Property, Plant and Equipment
    • The required reconciliation of written down values is missing
  • Note 10: Cash Flow Information
    • Two of the figures under ‘Changes in assets and liabilities’ do not match the Statement of Financial Position.
  • Missing Notes
    • Commitments
    • Events after the reporting period

An independent opinion on the financial statements – the Independent Auditor’s Report (the second last page of the Financial Report)

  • This is a ‘clean’ opinion.  Read here and here to draw the right conclusions from this.

Membership of accountability organisations claimed

 

(End of review)

 

 

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

[ii] From the ASIC (www.asic.gov.au) database, 20.12.15.

[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.

[v] FastClass: Annual financial statements for NFP – Online, www.cpaaustralia.com.au, accessed December 2015.

Melbourne School of Theology, charity review

This is a charity review, a review for those with an interest in the Australian charity Melbourne School of Theology (MST).

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 decision about MST.

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, on 23 December 2015, and invited them to comment. On 5 January 2016, the Board chair, Rosemary Wong, via the Vice Principal (Community & Operations), declined the invitation.

Organisation of this review

  • 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.)
  • There is then a more detailed comment on the Financial Report.
  • Lastly, there is a section Membership of accountability organisations claimed.

Sources

REGISTRATION DETAILS

Entity Subtype

  • MST is a bible college but ‘Advancing religion’ is not mentioned. Compare with, for instance, Bible College of Queensland, which also has deductible gift recipient status despite being about ‘advancing religion’.
  • The ‘Objects’ in the constitution make education the aim of MST, and don’t mention the Gospel.

CHARITY DETAILS

Legal Name

  • Not to be confused with another charity, The Trustee For (sic) Melbourne School of Theology Ministry Fund.
    • A separate charity, yes, but maybe the financial information should be consolidated with MST? See Latest financial report – detail, below.
  • Another MST business name was current during the year: Nash Institute for Advanced Studies in Theology and Culture.
  • MST is a public company, a company limited by guarantee.
  • It is permitted to omit ‘Ltd’ on the end of its name.

Charity ABN

  • Tax deductibility: You can claim a tax deduction for a donation to MST.
  • As you can for its two funds, Bible College of Victoria Building Fund and Bible College of Victoria Library.

Charity Street Address

  • The postal address, from the website: PO Box 6257 Vermont South VIC 3133

ANNUAL REPORTING

  • AIS 2014
    • This is MST’s compulsory Annual Information Statement 2014 (AIS 2014).
    • It gives basic financial information. If you think that this is sufficient for you, all the figures match those in the financial statements except for a minor mistake with interest received ($1K overstated).
  • Financial Report 2014
    • The report was signed four months after the year end.
    • It was then lodged two months after that.
    • The coverage of finances in this review is left until the financial report proper (see Latest financial report – detail, below).

ABOUT THE CHARITY

  • Statement of Faith
    • Called their ‘theological position’.
    • Which is the same, with the addition of the first paragraph, as their ‘doctrinal basis’ in the constitution (see Charity’s Document (sic)).

Date Established

Who the Charity Benefits

  • Vision
    • None found.
  • Mission
    • None found.
  • Activities (What did MST do?)
    • From Description of charity’s activities and outcomes in the AIS 2014:
    • The principal activity of the Company is the provision of training facilities in the theological discipline at a post-secondary level.
  • Outcomes (What did MST deliver?)
    • MST did not respond to the request in the AIS 2014 for a description of its outcomes.
    • None found on the website.
  • Impact (How were people’s lives improved?)
    • Nothing found.

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)[ii]

  • MST calls for donations on its website.
  • It does not hold a fundraising licence in this state, nor in any of the other six that have a licencing regime.
    • Whether it needs these licences depends on whether those states think that MST, by calling for donations on their website, are ‘fundraising’ in their State.

Size of Charity

  • With a revenue of $2.26 m, MST easily qualifies in the largest of the ACNC three size categories (‘Large’).

CHARITY’S DOCUMENT (SIC)

  • There is no Annual Report/Review available on the ACNC Register.
  • Nor on the MST website.

RESPONSIBLE PERSONS

No. of Australian ‘responsible person’ positions[iii]

Geoffrey Cox                                9

Yean Lim                                      4

Kathryn Pocklington                  2

Glenn Ward                                 2 (but not The Trustee for the MST…)

Rosemary Wong                          2

Michael Wong                             9

David Rietveld                             4

Patrick Lok                                   9

Mark Emerson                            3

Brian Bayston                              9

  • This listing does not match that on the website: there Yean Lim is listed twice and Rietveld and Wong are not included.
    • Neither are they included in the Directors’ Report.
  • Is David Rietveld this one?

(End of review of the ACNC Register information)

Latest financial report – detail

  • There is no explanation why the Melbourne School of Theology Ministry Fund, for which MST is the trustee and the ‘responsible persons’ are identical[iv], is not consolidated with MST.
  • Given that MST has staff, students and supporters numbering in the hundreds (more?), there is insufficient explanation by the directors for their conclusion that none of their users, either current or prospective, depend on the type of financial statements that are fully compliant with the Australian accounting standards (see Note 1, below.)

Directors’ Report (the first page of the Financial Report)

  • No such report is required by the ACNC.
  • Missing sections:
    • Performance measures
    • Information on directors
    • Company secretary
    • Meetings of directors
    • Contributions on winding up – although an incomplete version is in the Notes.

Auditor’s Independence Declaration…– the second page of the Financial Report

  • The ACNC does not require this to be lodged.

What was earned, what was consumed during the year – the Statement of Comprehensive Income (the third page of the Financial Report)

  • ‘Revenue’ should be disclosed.
  • The section below ‘Total comprehensive income…’ should not be included.
  • The following expenses are not disclosed:
    • ‘Finance costs’
    • Fundraising
    • Superannuation expense
    • Cost of sales (for the ‘Hire of facilities & Catering’ revenue)
  • The outflow here is ‘expenses’, not ‘expenditure’ (the latter can include, for instance, asset purchases).
  • The expenses classification is a mixture of the two permitted methods.

Where the earnings came from (including Note 2)

  • Fees’ – presumably from students – comprise 58% of income.
  • The next largest source is supporters – 25%.
  • 16% – taking the total to 99% – comes from ‘Hire of Facilities & Catering’.
  • ‘Investments’ (see below) are held. No dividends?
  • The gain on the sale of assets is not revenue.
  • Other than splitting $31K of ‘Sundry Income’, Note 2 duplicates what is here.
    • Interest received:
      • Should be ‘Interest revenue’.
      • Why ‘Other persons’?

What was consumed during the period (reordered by size)

  • Salaries & Oncosts $1.38 m: Is this equivalent to the Accounting Standards’ term ‘employee benefits’?
  • Faculty & Student Costs $369K: There is no description of what is included in this item.
  • Administration Expenses $222K: This represents 10% of ‘income’.
  • Depreciation of Fixed Assets $160K: ‘Fixed assets’ is an antiquated description.
  • Household Expenses $23K: For whose household were these?

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

Assets

  • Cash $138K (including Note 3)
    • This should be ‘Cash and cash equivalents’.
    • Where is the separate accounting for the monies received into each of the two funds that attract a tax deduction (see Charity ABN, above)?
  • Receivables $184K (including Note 4)
    • This should be ‘Trade and other receivables’.
  • Investments $500K
    • This is the majority of the current assets total, yet there is no explanation
  • Land, Buildings, Plant & Equipment $10.55 m (including Note 5)
    • As acknowledged in Note 1, this should be ‘Property, Plant and Equipment’
    • The heading on Note 5 does not match the contents.
    • The required reconciliation of written down values is missing.
    • Neither the nature nor the timing of the valuation of the property is shown.

Liabilities

  • Accounts Payable $104K (including Note 6)
    • This should be ‘Trade and other payables’
  • Borrowings $82K (current), $536K (non-current) (including Note 8)
    • This should be ‘Financial liabilities’
    • Bank Bill Business Loan $418K:
    • There is no reason given for this sizeable borrowing.
    • Nor are the terms disclosed.
  • Provisions $175K (current), $43K (non-current) (including Note 7)
    • The last two items are not normally called ‘provisions’

Where the cash came from and went to – the Statement of Cash Flows (the fifth page of the Financial Report)

  • Cash Flow From Operating Activities
    • Is the rental income $299K more properly described as hire income?
    • ‘Bequests and legacies’ is missing.

Movements in the net wealth of the charity – the Statement of Changes in Equity – the sixth page of the Financial Report

  • ‘Shareholders’ is not the correct name for the members of this type of company..

Essential information to go with the figures – the Notes to the Financial Statements – the seventh page of the financial report

  • 1. Statement of Significant Accounting Policies
      • The directors say the company is a ‘not a reporting entity’ because ‘there are no users who are dependent on its general purpose financial reports’.
        • They are in effect saying that anybody who is interested in this company has the power to contact the company and request a report tailored to their particular needs. This is highly unlikely. No such offer is made on the website.
        • The result of the decision is that the accounts don’t comply with the Australian Accounting Standards, and can disclose considerably less than that required for a general purpose report, a report designed for those people who are dependent on the charity’s report for the information they need.
        • You can compare the directors’ decision to this advice from the ACNC:
          • If people use and rely on your charity’s financial statements to help them make decisions (for example, about how to spend money) then your charity is most likely a reporting entity.
            • Although not clear from this, the directors should also consider prospective users.
      • The Accounting Standards that were followed are not disclosed.
      • Missing information:
        • Functional and presentation currency
        • Registered office and principal place of business (if different)
        • When the statements were authorised for issue and whether they can be amended and reissued.
  • Revenue
    • The two largest sources of revenue are not mentioned.
    • Nor is interest.
    • There is a policy on grants when there is no grant revenue.
  • Property Plant & Equipment
    • There are no leasehold improvements, so no need for the policy note.
    • The ‘depreciable rates’ listing does not match the assets held.
    • Policies on derecognition and the review of depreciation factors are missing.
  • Cash
    • This should be ‘Cash and cash equivalents’
    • Short-term deposits would never be included by MST? (Three months or less is normal.)
  • Incomplete policy Notes
    • ‘Net Fair Values’
    • ‘Employee Entitlements’: short-term entitlements.
    • ‘Liability of Members’: the amount of the guarantee and either the total liability or the number of members.
  • Missing policy Notes
    • Current and non-current classification
    • Goods and services tax (GST) and other similar taxes
    • New Accounting Standards and Interpretations
    • Critical accounting estimates and judgements.
    • Impairment of non-financial assets
    • Trade and other payables
    • Trade and other receivables
  • Note 9 Contingent Liabilities
    • Don’t student fees have to be repaid under certain circumstances?
  • Missing Notes
    • Commitments
    • Events after reporting period

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

  • The auditor signed before the second director had signed the Directors’ declaration.
  • This is a ‘clean’ opinion.  Read here and here to draw the right conclusions from this.

Membership of accountability organisations claimed

 

(End of review)

 

 

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

[ii] 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.’

[iii] 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.

[iv] I have assumed that ‘Glenn Ward’ on the Register for the Trust is meant to be ‘David Ward’, one of the directors of MST.