Australian Evangelical Alliance Inc (Missions Interlink), charity review

This is a charity review, a review for those with an interest in the Australian charity Australian Evangelical Alliance Incorporated (Missions Interlink (MI)).

It is structured according to the charity’s entry on the ACNC Register, and its purpose is to supply some information extra to what is there, information that may be helpful in your decision about MI.

It is up to you to decide whether any or all of the information presented here is what you need in order to make your 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, on 11 July 2016, to the charity and invited them to comment. They did not respond.

Organisation of this review

  • 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.

Sources

  • The ACNC Register entry (including links)
  • Google search on the charity’s names.
  • The MI website.
  • Facebook is the only social media button on the website.
  • Not on LinkedIn.
  • State government fundraising licence registers.
  • No reviews of the Australian organisation on Glassdoor.

REGISTRATION DETAILS

  • A Subtype that is consistent with sharing the Gospel.
  • And the Gospel is what MI is all about:
    • As a catalyst for Christian unity, cooperation and mission, the object of the Association is…to advance, propagate, promote or defend the Christian faith globally and to serve the Christian community by all such means being charitable as the Association shall determine..

CHARITY DETAILS

Legal Name

  • MI is a Victorian incorporated association (A0012495P).
  • Not to be confused with three other organisations on the Register with ‘Evangelical Alliance’ in their name:
    • One with almost the same name, registration of which has been ‘voluntarily revoked’,
    • Ea (sic) Foundation (The Trustee for Evangelical Alliance Foundation Trust Fund) , and
    • The Trustee for Evangelical Alliance Foundation Trust Fund (EA Foundation).
    • EA Foundation says that MI is an ‘affiliate’.
  • Google is confused: the website link in its box on the right hand side of the search results goes to Ea Foundation, not MI.
  • MI itself appears to be confused, saying that it is ‘a ministry of the Australian Evangelical Alliance Inc.’ But that’s its own name!

Other Name(s)

  • There are also three other organisations on the Register with ‘Missions Interlink’ in their name:
    • The first of the three above,
    • The ‘Voluntarily revoked’ Missions Interlink Victoria.
    • Missions Interlink NSW.
      • Missions Interlink NSW is a State branch of MI. There is no explanation of why the Victorian branch deregistered, or why the other State branches are not registered. (Or, alternatively, why NSW is still registered.)

Charity ABN

  • Tax deductibility: No tax deduction can be claimed for a donation to MI.

Charity Address for Service

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

Charity Street Address

  • Postal address: PO Box 175, Box Hill VIC 3128

Email

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

ANNUAL REPORTING

  • AIS 2015
    • This is MI’s compulsory Annual Information Statement 2015 (AIS 2015).
    • It gives basic financial information. If you think that this might be sufficient for you, the figures match those in the Financial Report.
  • Financial Report 2015
    • The accounts were signed three months after year end.
    • The Report was then lodged a month later, two months before the normal deadline.
    • The coverage of finances in this review is left until the financial report proper (see Latest financial report – detail, below). (Go straight there.)

ABOUT THE CHARITY

  • Statement of Faith
    • See the link in ‘Our Basis of Faith’, have way down here.
    • The Supplement that is there is additional to what is in the constitution.

Date Established

Who the Charity Benefits

  • Vision
  • Mission: the second two thirds of the Vision section?
  • Activities (What does MI do?)
    • From the AIS 2015’s Description of charity’s activities and outcomes:
      • It linked, equipped, served, and represented organisations and churches across Australia to help them engage together in effective cross-cultural and global mission.
        • This is identical last year, so not a very helpful description of 2015’s activities.
    • The Annual Report provides a brief report on the activities of the year.
      • Training Programs
      • Training Workshops
      • National Networks
      • MI Not-For-Profit Events
      • Other National MI Events
      • Resources & Information
      • MI Standards Compliance
      • Dealing with Government
    • The two best benefits are not available to Associates, only Members:
      • Only approved Members are entitled to:
        • Use the Member of Missions Interlink and Standards Compliant logos on stationery and publications.
        • Exemption from Australian income tax for organisations and personnel serving overseas, through recognition by the ATO as a member of a prescribed institution under Section 50.50 (d) of the Income Tax Assessment Act 1936 [Income Tax Assessment Regulations 1997 (Regulation 50.50.02)]. See here for more information.
      • This is the claimed value of the logos:
        • Member use of the Missions Interlink logo implies high standards of governance and financial accountability, giving the Christian public assurance of their integrity.
          • This is currently the only such certification or rating for Christian organisations in Australia.
          • Its value depends a good deal on MI’s enforcement of the standards, particularly those applicable only to Members.
          • This enforcement was an expectation of the Government when MI and its members were granted their special income tax exemption mentioned above.
          • This is what they did in the way of compliance in 2015:
            • Individual compliance assistance and advice has been given to some, mostly smaller, Member organisations. The ACNC register has been monitored for Member information, reporting and documents, and more comprehensive Member compliance reviews will commence in the coming year.
          • Independent evidence of Member compliance, and therefore ‘assurance of…integrity’, can be seen by selecting the category ‘Mission Interlink members’ here.
            • The non-compliance shown by many members is despite (a) MI’s compliance monitoring and education, and (b) a declaration by the Member at the time of renewal that it is compliant.
  • Outcomes (What was delivered?)
    • Unfortunately, in the AIS 2015, in response to the request to describe outcomes, nothing is given.
    • Nothing found.
  • Impacts (How are people’s lives improved?)
    • Nothing found

Size of Charity

  • MI revenue was $273K, just exceeding the $250K threshold for the middle size of charity.

Financial Year End

  • This means that the next financial report is due by 31 December 2016 – or 31 January if the ACNC again gives its (generous) extension (to all charities). Before that the financial information on the Register will be up to 18 months out-of-date.
    • You may therefore need to ask for more up-to-date information.

WHERE THE CHARITY OPERATES

Operating State(s)[1]

  • With no branch in the ACT or Tasmania, and no events listed for these states, it is not clear why they are included in this list.
  • MI has the required Registered Australian Body registration[2] (ARBN 056 007 820).
  • MI appears not to solicit donations from the public. The lack of fundraising licences therefore seems reasonable.

CHARITY’S DOCUMENT (sic)

RESPONSIBLE PERSONS

No. of Australian ‘responsible person’ positions[3]

John ANDERSON                           31

Borneman, BARRY                           4 (after correcting the MI name reversal)

Geoffrey COLTON                             2

Glenda De JAGER                             4 (but Mukti Australia Inc have entered her twice)

Richard DICKINS                              2 (including the Ea (sic) Foundation)

Judith KAY                                          3 (including Missions Interlink NSW)

  • This list matches the one on the website. That list is subsumed in the list of the members of something called the National Leadership Team (NLT).
  • There is no explanation on the website of the relationship between the board and the NLT.
  • MI’s governing document, its Rules (see Charity’s Document (sic), below) say that
    • The affairs of the Association shall be managed by a Board of Management (Clause 18.1).
  • This is supported and amplified by the MI Regulations:
    • The affairs of Missions Interlink shall be managed by the Board as assisted by recommendations from the NLT (Clause 18.1).
      • However, it doesn’t appear that this is the way MI operates. For instance,
        • the Mission Leaders letter sent to members and associates at renewal time was signed by the NLT, not the board.
        • The decision on a major new program, the Mission Matching Service, was made by the NLT, not the board [Annual Report, page 3].
  • The Rules require a Secretary. Not a member of the board?

(End of review of the ACNC Register information)

Latest financial report – detail[4]

  • This is where you can see how MI itself complies with the requirements it has set for its Members.

Cover page

  • Neither the name ‘ea’ nor the logo belong to MI. In fact they are not registered to anybody, just used by Ea Foundation to describe the unregistered ‘family’ of organisations called the Evangelical Alliance.

What was earned, what was consumed during the year – the Statement of Comprehensive Income (page 1 of the Financial Report)

  • Revenue should be disclosed, and classified sales versus other.
  • The classification of income has, without explanation, been changed from last year. As a consequence, we no longer know how much was earned
    • in grants (2014: $13K; 2013: $23K).
    • from training (2014: $52K; 2013: $zero).
    • on deposits (2014: $5K; 2014 $5K).
    • from the sale of ‘resources’ (2014: $5k; 2013: $4K).
  • Donations & Grants $87K
    • There is no explanation why, for “a membership-based organisation” that doesn’t seek donations on its website, donations should be such a large – and apparently growing – proportion of the revenue.
  • Events Income $79K
    • There is no explanation why this income has fallen from $117K.
  • Membership & Affiliation Fees $100K
    • With approximately 120 Members and 40 Associates, this revenue represents an average fee of $625 p.a.
    • 2015-16 fees ranged from $420 to $1826 for Members and $121 to $1496 for Associates.
  • The classification of expenses has, without explanation, been changed from last year. As a consequence, we no longer know how much
    • events cost to run.
    • ‘Transition Training’, and other training, cost to run.
    • money was given to state branches.
    • gross profit was made on the sale of ‘resources’.
    • the audit cost [2014:$4K; 2013: $1K].
    • was incurred for travel (and accommodation). Or consultants.
  • The expenses are a mixed of the two permissible classifications.
  • Administration Expenses $9K: what is included?
  • Employee Expenses $158K
    • This represents 60% of expenses.
    • The AIS 2015 says there were six part-time and three casual employees. If part-timers averaged 50% of full-time, and casual 10%, that’s average benefits of $48K pa.
  • Less Cost of Activities $80K
    • The items above this line are not all activities.
  • Net income for the year $194K
    • This is not a proper calculation in accounting.

What’s left at the end of the year – the Statement of Financial Position (page 2 of the Financial Report)

  • Cash at Bank $167K
  • Cash on Hand
  • Investments $31K
    • This disclosure does not comply with the Accounting Standards. Nor with MI’s own policy Notes.
  • Deferred Income $70K
    • There is no explanation of this item.
    • Nor why it is has increased from $28K.
    • Or why the 2014 figure does not match last year’s statements.
  • Special Reserves $84K
    • There is no explanation as to why they are ‘special’.
    • Perhaps they are not special – they are called ‘General’ in the Statement of Changes in Equity.

Movements in the net wealth of the charity – the Statement of Changes in Equity (page 3 of the Financial Report)

  • The description of the surplus differs from the same amount in the Statement of Comprehensive Income.
  • ‘Other comprehensive income’ and ‘Total comprehensive income’ is missing.

Essential information to go with the figures: the Notes to and forming part of the Accounts (page 5 of the Financial Report)

  • 1. Statement of significant accounting policies
    • The decision to produce ‘a special purpose financial report’
      • The directors give no reason for this decision, a decision that results in a report that doesn’t have to comply with all the Australian Accounting Standards, and therefore one deemed not suitable for those people who rely on MI’s financial statements as their major source of financial information.
      • The type of report they have produced implies that all their users, both current and prospective, are in a position to command MI to tailor a report to their needs. This is unlikely, probably highly unlikely.
      • For a professionally-managed organisation with over 160 organisational members, and that is promoting membership publicly, one might reasonably have expected the opposite decision.
      • An example of the information that do not get as a result is the disclosure of the result of its relationship to related parties.
    • The directors do not say how they chose the accounting policies they use.
      • There is no listing of the Accounting Standards that were followed.
    • The following information is missing: individual entity? historical cost? functional and presentation currency, and the date the report was authorised for issue.
    • a.  Income tax: on what grounds?
    • b. Revenue: what about the policy for the first and third largest sources of revenue?
    • c. Cash and cash equivalents: no equivalents are mentioned.
    • d. Trade and other receivables: tThe possibility of bad debts is not mentioned.
    • e. Fixed Assets:
      • a term that is well out-of-date.
      • Missing information: the rates, method, review processes, and derecognition.
    • g. Investments:
      • not classified according to the Accounting Standards.
      • What are they?
    • h. Employee Benefits: the usual distinction between short-term and long-term is missing.
    • j. Goods and Services Tax (GST): policies for cash flows and commitments and contingencies are missing.
    • Missing policy Notes:
      • New, revised or amending Accounting Standards and Interpretations adopted
      • Current and non-current classification
      • Impairment of non-financial assets
      • Fair value measurement
      • New Accounting Standards and Interpretations not yet mandatory or early adopted
  • Missing Notes
    • Critical accounting judgements, estimates and assumptions
    • Property, plant and equipment
    • Remuneration of auditors
    • Contingencies
    • Commitments

Where the directors put their name to the Report – the ‘Annual Statements Give (sic) True and Fair View of Financial Position and Performance of Incorporated Association’ (page 8 of the Financial Report)

  • The title is incorrect. (Even as a description of the contents it is incorrect.) It should be ‘Directors’ Declaration’.

An independent opinion on the financial statements : the Independent Auditor’s Report (page 9 of the Financial Report)

  • The auditor, in accepting the engagement, has assessed the directors’ decision that MI is not a ‘reporting entity’, and agreed with it. That is, they also think that MI 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 MI to produce a report tailored to their needs).
  • This is a ‘clean’ opinion. Read here and here to draw the right conclusions from this.

Membership of accountability organisations

  • None claimed.
  • MI holds its members accountable, but who holds MI accountable?
    • For instance, all its directors are senior employees (mostly CEOs) of its own Members.

(End of review)

  1. 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.’
  2. Required because it operates outside its home state.
  3. 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.
  4. I use the Pinnacle Financial Statements, respected in the profession as providing a very sound basis for producing compliant financial reports. To this I add an assessment of materiality (both quantitative and qualitative), where the users being considered are donors.

Church Missionary Society – Australia Limited, charity review

This is a charity review, a review for those with an interest in the Australian charity Church Missionary Society – Australia Limited (CMS-A)

It is structured according to the charity’s entry on the ACNC Register, and its purpose is to supply some information extra to what is there, information that may be helpful in your decision about CMS-A.

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 11 June 2016, and invited them to comment. An email exchange with the ‘Business Manager & Company Secretary’ resulted in an extension of the time to reply until the new financial year. It is now over a week after the agreed date, and I have heard nothing.

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.

Sources

  • ACNC Register (including links)
  • Google search on the charity’s name.
  • CMS-A website.
  • Only Twitter on their social media list. (The other organisations are separate charities.)
  • LinkedIn.
  • State government fundraising licence registers.
  • No reviews yet on Glassdoor.

REGISTRATION DETAILS

Entity Subtype

  • A subtype consistent with sharing the Gospel.
  • Sharing the Gospel is integral to the objects in the constitution:
    • The objects of CMS-A are to facilitate the work of the Church Missionary Society through its Branches for the coming of God’s Kingdom through the proclamation of the Gospel of Christ throughout the world in fellowship with local churches…

CHARITY DETAILS

Legal Name

  • CMS-A is a company limited by guarantee. It is permitted to omit ‘Limited/Ltd’ at the end of its name.
  • The situation is confused somewhat by the existence of another charity, Church Missionary Society Trust Limited:
    • CMS-A’s constitution (clause 38.1) says that this trust is the trustee of CMS-A. But CMS-A is not a trust.
    • The same clause says that the trust ‘shall act in accordance with such direction as shall be given from time to time by CMS-A, yet the trust is controlled by a separate charity, Church Missionary Society NSW & Act Limited. A charity that does not have the same directors as CMS-A.
    • The trust holds CMS-A’s properties, yet CMS-A’s Financial Report includes the properties in its balance sheet and doesn’t mention the ownership.
  • CMS-A also
    • controls another charity, Church Missionary Society – Australia as the operator of a PBI, and
    • is the trustee of a third charity, CMS Australia Ancillary Fund.
  • CMS-A’s members are branches (or CMS-A) and 24 (originally at least) people by virtue of their office (in CMS-A and the branches).
  • Although called ‘branches’, these entities are separate legal entities that do not appear to be controlled by CMS-A. However, the CMS-A website gives the impression that it is all one organisation; for instance, it shows NSW/Act’s conference centre as its own.

Other Name(s)

  • The sub-entity is a separate charity. This is an automatic consequence of CMS-A having a Public Benevolent Institution (PBI) when the ACNC came into being.   It can continue to avoid having to report separately by CMS-A applying to the ACNC to report as a group. At the moment the Register is showing that its AIS 2015 is overdue.
  • The second name, CMS Aboriginal Work in North Australia (Deductible Gift Recipient Fund) is the PBI above, not another CMS-A entity.
  • The third name St Andrew’s Hall, is CMS-A’s business name – its only one.
    • This means that its use of for instance, CMS Australia on Twitter, and CMS plus CMS Australia on LinkedIn is questionable.
    • It has a trading name, Church Missionary Society Australia, but this is of no practical effect.
  • The fourth, and last, name, MENTAC, is a program of two organisations, CMS-A and Queensland Theological College. It is not a registered name, and therefore neither organisation can legally trade under this name.
  • The constitution (clause 3.2) says that one of the ways that CMS-A fulfils its objects is ‘by owning and controlling the use of the names ‘CMS’ and ‘Church Missionary Society’ and related logos, trade marks and other intellectual property…’. But neither of these names is registered to CMS-A.

Charity ABN

  • Tax deductibility: No, you cannot claim a tax deduction for a donation to CMS-A.
    • But you can to its funds, CMS Overseas Aid Fund, St Andrew’s Hall Building Fund Parkville D (sic), and CMS Aboriginal Missionary Work in North Australia.

Charity Street Address

  • Postal address, fron the website: PO Box 20095 World Square NSW 2002.

ANNUAL REPORTING

  • AIS 2015
    • This is CMS-A’s compulsory Annual Information Statement 2015 (AIS 2015).
    • It gives basic financial information. If you think that this might be sufficient for you
      • The statements are the type that don’t require compliance with all the Australian Accounting Standards.
      • ‘Donations and bequests’ includes $7.20 m ‘Contributions from Branch members’ (whatever they are), and $660K ‘Contributions from CMS-A Ancilliary Fund’ (see Legal Name, above).
      • There is insufficient information in the Financial Report to check any of the ‘Expenses/Payments’.
      • The ‘Net surplus/deficit’ is not $148K, but $403K.
      • ‘Non-current loans’ are not zero, but $238K (unsecured loans to missionaries).
  • Financial Report 2015
    • The Report was signed two and a half months after the year end.
    • It was then lodged four and a half months after that, two days before the last day permissible (and that was after a generous extension by the ACNC).
    • The coverage of finances in this review is left until the financial report proper (see Latest financial report – detail, below). (Go straight there.)

ABOUT THE CHARITY

  • Statement of Faith
    • There is no conventional ‘statement of faith’ on the website, but there’s a short statement of what they believe under ‘Our Foundations’.
    • The Apostles’ Creed is the ‘Statement of Faith’ in the constitution (Schedule 2).
    • The Declaration of Principles and Commitments in the constitution (Schedule 1), and its use in that document, makes it clear that CMS-A is an Anglican organisation.
    • CMS-A has made its values explicit.

Date Established

  • The website has a history of CMS-A.
  • And here’s a book with the history to 1971.

Who the Charity Benefits

  • Vision
    • Our vision is for a world that knows Jesus!
    • There’s another one in their ‘complete Vision statement’:
      • In response to these truths, our Vision is – to reach gospel-poor peoples for Christ – to equip Christian leaders for church and society – to engage churches in cross-cultural mission
  • Mission
    • None found.
  • Activities (What did CMS-A do?)
    • In the AIS 2015:
      • CMS workers have continued to serve as co-labourers with over 100 international partners, including churches, schools, universities and Christian organisations, in more than 40 countries around the world. Our partners are involved in ministries that fit with our gospel vision and purpose. Our partners have welcomed CMS workers into their programs and ministries to share the lasting hope of Jesus Christ with people. We have continued to encourage people to get involved in cross-cultural mission through our six branches across Australia. The CMS-Australia office, based in Sydney, works for and on behalf of the branches to train cross-cultural workers, place them with international partners and provide pastoral care for them. CMS is a deductible gift recipient for provision of overseas aid in several countries, for aboriginal work in North Australia and in support of St Andrews Hall, the CMS training college in Victoria.
        • Apart from a change from 35 countries to 40, this is identical to what appeared in last year’s AIS. So nothing specific about 2015’s activities, as requested.
  • Outcomes (What did CMS-A deliver?)
    • CMS-A did not respond to the request in the AIS for its outcomes.
    • Nothing systematic found.
    • I’m sure there would be some anecdotal information under ‘Resources’ in the main menu.
  • Impact (How were people’s lives improved?)
    • Nothing systematic found.
    • I’m sure there would be some anecdotal information under ‘Resources’ in the main menu.

Size of Charity

  • CMS-A easily qualifies in this category.

Financial Year End

  • This means that the next financial report is due by 31 December 2016 – or 31 January if the ACNC give their usual extension (to all charities). Before that the financial information on the Register will be up to 18 months out-of-date.
    • You may therefore need to ask for more up-to-date information.

WHERE THE CHARITY OPERATES

Operating State(s)[1]

  • Why only these two states? Apart from branches in other states, CMS-A says that it has a Queensland conference centre. (The fact that the Queensland Baptists say that it belongs to them is not explained.)
  • CMS-A doesn’t have a fundraising licence in either of these states.
  • It doesn’t have a fundraising licence in any of the five others that have a licensing regime.
  • CMS-A has a general appeal for donations under ‘Give’ in its website footer, under ‘Get involved’ in the main menu, and sometimes specific requests in the website banner.
    • Apart from exemptions, whether it needs a licence depends on whether it is ‘fundraising’ in those states in which it operates, and whether those states, and the others, think that CMS-A, by calling for donations publicly, is ‘fundraising’ in their territory.

Operates in (Countries)

  • There is considerable difference, even allowing for the use of regions (presumably for security), between this listing and the one on the website.

CHARITY’S DOCUMENT (SIC)

  • An Annual Report/Review can be lodged on the ACNC Register, but CMS-A hasn’t done this.
  • Nor is there one on the website. (There’s an AGM report, but it is password-protected.)

RESPONSIBLE PERSONS

No. of Australian ‘responsible person’ positions[2]

Kirsty Brown                                7 (but one duplicate)

Jeremy Gehrmann                      4

Geoffrey Girvan                           3

Colin Grundy                               3

Khim Harris                                4

Christine McComb                     5

Robert McPaul                            6

Malcolm Richards                      5

Darren Russ                                5

Howard Spencer                        4

John Sugars                                7

Pam Thyer                                  6

  • You would be right to question whether those directors with a large number of directorships – and remember, this is only the number for charities, not all organisations – have enough time to satisfactorily discharge their responsibility under the law for each one.
  • Is Rob this one?
  • Six of the 16 directors in the Financial Report are no longer on the Board according to the above list, and Brown is additional to that list.
    • The reduction in the number of directors has meant that CMS-A is now one short of the number required by its constitution (clause 10.1).
  • Some information on each of the directors – at least those serving on 14 September 2015 – is on the website.
  • Under ‘Position’, there should be some office-bearers; for instance, Colin Grundy is identified as the Treasurer, and Martin Bleby as the Chairman in the Directors’ Report.

(End of review of the ACNC Register information)

Latest financial report – detail[3]

  • The directors’ belief that ‘a special purpose financial report’ is acceptable, a choice that allows them to make less than a full disclosure about CMS-A’s finances and operations, is implicitly a statement that any user is able to command the preparation of a financial report tailored to their needs. That’s all the people who they speak to here and overseas, and all the donors and potential donors who read the website material. Do the directors realise they are saying this?
  • There is no explanation as to why CMS-A doesn’t
    • produce consolidated financial statements, or
    • take advantage of the ACNC’s group reporting provisions.
    • To get a full picture of CMS-A you therefore need to look also at CMS Australia Ancillary Fund.

The Directors’ Report – page 3 of the Financial Report

  • This is not required by the ACNC. (Nor is the Auditor’s Independence Declaration on page 12 of the Financial Report.)
  • ‘Objectives & Strategies’:
    • No distinction between short-term and long-term objectives.
    • The same since 2012, so not specific to the year being reported on.
  • ‘Principal activities’:
    • the level of generality means that this is not a helpful report on 2015’s activities.
    • However, the content in sections 3 and 4, sections that are not required, provide the missing description for 2015.
  • ‘Information on the Directors’:
    • Is the information for the year or the period to the date of the report? It should be the latter.
    • There isn’t an answer to title, qualifications, experience and expertise, and special responsibilities for each director.
  • Missing section: ‘Performance measures’.
  • Sections 7 and 9 are not required.
  • The Members’ liability on winding up should show the total liability (or at least allow it to be calculated.)

What’s left at the end of the year – the Statement of Financial Position – page 13 of the Financial Report)

  • Cash and cash equivalents $2.27 m, including Note 7
    • Foreign currency cash but no foreign currency bank accounts?
  • Receivables $851K, including Note 8
    • No trade debtors?
    • Why would the Ancillary Fund owe CMS-A money?
    • Why no allowance for uncollectible accounts?
  • Financial assets $5.76 m (current), $1.02 m (non-current), including Note 9
    • Combined with the first item, this represents over 10 months’ worth of revenue.
    • Investments have not been classified according to the Accounting Standards.
  • Property, furniture and equipment $3.25 m, including Note 10
    • Property, furniture and equipment in the balance sheet, compared to Property and Equipment in the Note, compared to Property, Plant and Equipment in the Accounting Standards.
    • The deduction for depreciation is not a provision.
    • Why the distinction between Land & Buildings and Property?
    • What and where are the properties?
    • There is no defence of the decision to include the properties even though they are not owned by CMS-A.
    • The first two sections are a confusing presentation.
    • Land & Buildings
      • What kind of valuation?
      • No depreciation last year. Has this change in policy been handled according to AASB 1008?
    • Property
      • Where is the Accumulated Depreciation?
      • An Asset Revaluation Reserve is not an asset.
      • Why is undeveloped land held?
    • Equipment
      • What is ‘Property Equipment’?
    • Office furniture and equipment
      • Why so little depreciation charged this year?

Liabilities

  • Set-off account $5.11 m, including Note 18(b)
    • There is no explanation of this very significant figure.
  • Payables $1.45 m, including Note 11
    • Why would $800K or so be owed to the Ancillary Fund?
  • Loans $400K, including Note 12
    • Why would an organisation that is not short of cash need to borrow $400K?
    • Why has it not, for two years, been repaid?
  • Accumulated funds and reserves
    • Trust funds and Tax deductible funds are also both reserves.

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

Revenue

  • Sales revenue is not disclosed.
  • Where is the income from the services provided to the branches?
  • Revenue $9.67 m, including Note 2(a)
    • Donations received by tax deductible funds $1.81 m
      • This needs a direction to Note 4.
      • On what basis are these accrued?
    • Contributions from Branch Members $7.20 m
      • Contributions for what?
      • How are these calculated?
      • Is this a legal obligation?
    • Contributions from CMS-A Ancillary Fund $669K
      • CMS-A is not entitled to receive this money under the Fund’s Trust Deed – it has to go to one of its ‘tax deductible funds’.
  • Other Income $359K, including Note 2(b)
    • There is no explanation for the item Centre for Biblical Preaching.
    • Who makes the ‘Contributions for training’?
    • Rent received appears to be a continuing source of income. How then is it that there is no asset ‘Investment property’?
  • Finance Income $410K, including Note 2(c)
    • Where is the income from the other reserves?
    • Why are gains on the Property Replacement Portfolio (whatever that is) ‘financial income’?

Expenses

  • This list mixes the two permissible classifications of expenses.
  • Administration expenses are not disclosed.
  • Fund raising (sic) expenses, $453K, including Note 4
    • What kind of fundraising?
    • The Note at the end says that
      • these expenses have been limited to 25%. How much more did they exceed 25% (25 cents in every dollar raised)?
      • Branches are the ‘sole funding raising agencies’. Why then the call for funds on the CMS-A website?
  • Field grants for missionary support, $5.76 m
    • How does this relate to
      • the $1.72 m ‘Employee expenses’ in the AIS 2015?
      • the $824K of ‘Missionary support’, also included in the expenses?
  • Training $671K
    • Isn’t this for the training of missionaries, and therefore ‘missionary support’?
  • Operations $741K
    • How are most of the other line items also not ‘operations’?
  • Governance $109K
    • What kind of payments are included in this relatively sizeable sum?

Surplus/(Deficit) for the year, including Note 3

  • How does this $135K of employee benefits relate to the $1.72 m ‘Employee expenses’ in the AIS 2015?
    • Based on the information about number of employees in the AIS 2105, and asuming that part-timers work 50% and casuals 10% of full-time hours, the ‘Employee expenses’ represent $66K per employee.
    • And 17% of expenses.

Other comprehensive income

  • Why is ‘Trust Fund income’ included here?

Movements in the net wealth of the charity – the Statement of Changes in Equity – page 15 of the Financial Report)

  • This doesn’t flow well from the Statement of Comprehensive Income, as it is meant to:
    • ‘Other Comprehensive Income’ is negative there, but positive here.
    • The surplus is not shown.

Where the cash came from and where it went – the Statement of Cash Flows – page 16 of the Financial Report

  • Due to the lack of detail in the first section, it is not possible to see why there is such a difference between the accrual (Statement of Comprehensive Income) and cash figures for revenue.
  • Why is rent paid a financial activity?

Essential information to go with the figures – the Notes to the Financial Statements – page 17 of the Financial Report)

  • Note 1 – Significant Accounting Policies Statement
    • (a) Statement of Compliance:
      • Which standards have been complied with?
    • (d) Economic Dependency
      • How are the contributions due by branches calculated?
      • Are they legally enforceable?
    • (h) Property and Equipment
      • The immediate expensing of all overseas purchases means that assets are understated. What is the magnitude of this misstatement?
      • What useful lives are used?
    • (m) Revenue and Other Income
      • Branch contributions are a debt due?
      • How can donations be recognised other than on cash basis?
    • (n) Goods and Services Tax (GST)
      • The GST on commitments and contingencies?
    • (o) and (p) are not required.
    • (q) Critical Accounting Estimates and Judgements
      • There is no estimation or judgement involved in valuing listed shares.
    • Policy Notes normally included but not in these accounts:
      • New, revised or amending Accounting Standards and Interpretations adopted
      • Current and non-current classification
      • Trade and other payables
      • Trade and other receivables
      • Fair value measurement
  • Note 5 – Related Parties
    • services…the value of which is not possible to quantify’: But aren’t there quantified transactions and balances with the branches shown in these accounts?
    • What about the trust associated with one of the branches, included the fact that it owns the CMS-A properties?
    • And the Anglican Evangelical Trust?
  • Note 14 – Equity
    • The equation here of equity with share capital is incorrect. And contradicted by the presence of the Statement of Changes in Equity (see above).
  • Note 16 – Capital and Leasing Commitments
    • What is a lease ‘for domestic purposes’?
    • The leased properties are not identified in the Property, furniture and equipment Note.
    • Why are these properties not in a separate asset Investment properties?
  • Note 18 – Cash Flow Information
    • (a) Reconciliation of operating surplus to…
      • What is ‘Premium on motor vehicle purchases’?
      • How does the ‘Realised gains on sale of shares’ relate to Other comprehensive income?
    • (b) Reconciliation of cash
      • The ‘treasury deposit’ cannot be both jointly held with the NSW/ACT branch and held on its behalf.
  • Notes normally included, but not in these accounts: Events after the reporting period

An independent opinion on the financial statements – the Independent Audit Report…- page 32 of the Financial Report)

  • This report is a ‘clean’ opinion. To take the right amount of comfort for this finding, please read here and here.
  • It is difficult to see how the auditor could reasonably agree that such a large and complex organisation was not a reporting entity (and therefore could produce statements not compliant with all the Australian Accounting Standards).
  • Why include the extra disclaimer Our audit did not involve an analysis of the prudence of business decisions made by directors of (sic) management?

Membership of accountability organisations claimed

(End of review)

 

 

  1. 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.’
  2. 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.
  3. I use the Pinnacle Financial Statements, respected in the profession as providing a very sound basis for producing compliant financial reports. To this I add an assessment of materiality (both quantitative and qualitative), where the users being considered are donors.

The Australian Navigators Ltd, charity review

This is a charity review, a review for those with an interest in the Australian charity The Australian Navigators Ltd (AN).

It is structured according to the charity’s entry on the ACNC Register, and its purpose is to supply some information extra to what is there, information that may be helpful in your decision about AN.

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 6 July 2016. Their response is incorporated below.

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

  • ACNC Register (including links)
  • Google search on the charity’s names (see Charity Details, below).
  • AN website. And Facebook – although only a single post there.
  • Not on YouTube, Twitter or LinkedIn.
  • State government fundraising licence registers.
  • No reviews of the Australian organisation on Glassdoor.

REGISTRATION DETAILS

  • A Subtype that is consistent with sharing the Gospel.
  • Which, according to the constitution, is AN’s only object:
    • The objects of the Company are to advance the Gospel of Jesus Christ in accordance with the Statement of Beliefs.

CHARITY DETAILS

Legal Name

  • AN is a public company limited by guarantee.
    • Although such a company has members, in the case of AN membership is only open to a ‘staff member’ (someone holding a paid or unpaid staff position).
  • It is not entitled to omit ‘Ltd/Limited’ at the end of its name.
    • Ministry comment: ‘The Board will consider this.’
  • It is in ‘partnership’ with the other Navigators organisations around the world:
    • These organizational forms are “owned” by Navigators in that country, and while legally independent, are covenantally committed to the international leadership community of our Worldwide Partnership [Working Together In Our Worldwide Partnership]

Charity ABN

  • Tax deductibility: You cannot claim a tax deduction for a donation to AN.

Charity Street Address

  • The postal address, from the website: PO Box 6210 Baulkham Hills NSW 2153

ANNUAL REPORTING

  • AIS 2015
    • This is AN’s compulsory Annual Information Statement 2015 (AIS 2015).
    • It gives basic financial information. If you think that this might be sufficient for you
      • Most of the Income Statement figures differ significantly from those in the Financial Report:
        • Ministry comment: ‘The Board will consider this.’
        • ‘Donations and bequests’ should be $1.41 m.
        • ‘Employee expenses should be $719K.
        • ‘Total expenses’ should be $$1.35 m.
        • ‘Net surplus/deficit’ should be $192K.
  • Financial Report 2015
    • The accounts were signed four months after year end.
    • The Report was then lodged a week later, two months before the normal deadline.
    • The coverage of finances in this review is left until the financial report proper (see Latest financial report – detail, below). (Go straight there.)

ABOUT THE CHARITY

  • Statement of Faith
    • See ‘Beliefs’, here.
    • Which match the Statement of Beliefs in the constitution.

Date Established

  • There’s a brief history on the website.

Who the Charity Benefits

  • Vision and Mission
    • These words come up many times in a search of the website, but there is no explicit vision or mission there.
    • However, AN – along with all the other Navigators organisations – does have a ‘calling’:
      • To advance the Gospel of Jesus and His Kingdom into the nations through spiritual generations of labourers living and discipling among the lost.
  • Activities (What did AN do?)
    • From the AIS 2015:
      • We raise up generations of disciples of Jesus Christ to advance the gospel. We are active in all areas of community including the student, business and military ministry.
        • This is identical to last year, so not a good response to the ACNC’s request for 2015’s activities.
        • A description of each of these areas is given on the website under the menu item ‘Ministries’.
        • Compare these activities to what your local evangelical church and its members are doing (or at least should be doing).
    • Here’s how ADFA describe what AN does there.
  • Outcomes (What was delivered?)
    • Unfortunately, in the AIS 2015, in response to the request to describe activities and outcomes, there are only activities (see above).
    • There are no outcomes given on the website.
      • Ministry comment: ‘Read our stories in the Compass magazines that are on our website.  They are not listed as outcomes as what we do is hard to explain without sounding proud and claiming ‘we did this’ when we know it is God’s doing.  It is also hard to see as what we do, under God, is help people become more like Christ – we disciple people and help them grow in their understanding and application of the Scriptures.  These are subjective at best and unknowable at the heart level except for God.  We also have seen people come to faith – again God’s work, but He uses us.  It is well known in mission circles that conversions are often claimed on the barest evidence (they took a tract, they put up their hand).  Our impacts are in the stories people tell of how God changed them so read our newsletter, speak to our local leaders and the people God is impacting through them.  So yes, we don’t trumpet what God is doing through us in our annual report.’
  • Impacts: (How were people’s lives improved?)
    • Nothing found.
      • Ministry comment: ‘Read our stories in the Compass magazines that are on our website.  See the answer above.’

Size of Charity

  • With revenue of $1.54 m, AN comfortably exceeds the qualification for the top size of charity ($1 m).

Financial Year End

  • This means that the next financial report is due by 31 December 2016 – or 31 January if the ACNC again gives its (generous) extension (to all charities). Before that the financial information on the Register will be up to 18 months out-of-date.
    • You may therefore need to ask for more up-to-date information.

WHERE THE CHARITY OPERATES

Operating State(s)[1]

  • AN doesn’t have a fundraising licence in either Vic or WA. Both have licensing regimes.
    • Ministry comment: ‘We are working on obtaining these’
  • AN has a prominent call for donations on its website.
    • It doesn’t have a fundraising licence in the other two states that have a licensing regime.

Operates in (Countries)

  • Assuming that neither Harry and Jennifer Burgess or Paul and Janae Denness work elsewhere overseas [Ministry comment: ‘they don’t’] this list matches the location of the overseas staff shown on the ‘Partner with Us’ page on the website.

CHARITY’S DOCUMENT (sic)

  • An Annual Report/Review can be lodged on the ACNC Register, but AN hasn’t done this.
  • Nor is there one on the website.

RESPONSIBLE PERSONS

No. of Australian ‘responsible person’ positions[2]

Jeff Buckpitt                                    1

Grant Dibden                                  1

Taryn Donohue                               1

Janice Lai                                         1

Mark Morrison                               3

Russell Skeleton                             1

Michael Swan                                 2

Ian Watts                                         3

  • This matches the directors listed on the website.
    • Whether the director is a member or an ‘Appointed Director’ is not disclosed.
  • Under ‘Position’:
    • What is the distinction between ‘Board member’ and ‘Director’?
      • Ministry comment: ‘None’

(End of review of the ACNC Register information)

Latest financial report – detail[3]

  • The financial statements have been significantly recast from the ones published last year. There is no explanation for this.
  • In many cases the figures in the 2014 column this year do not match those published last year.
  • 43% of the expenses are included merely as ‘Other expenses’.
  • The Statement of Profit or Loss… uses an outdated format.
  • There is no explanation for why a ministry with a $1.54 m turnover would hold 100% of its $726K non-cash funds buffer – if that is what it is – in a moderate to high risk asset class.

Directors’ Report (page 1 of the Financial Report)

  • No Directors’ Report is required by the ACNC.  Nor the constitution.
  • Compared to good practice:
    • The ‘Principal activities’ are not specific to 2015.
    • Nor are the ‘Objectives’ or the ‘Strategies’.
    • Other than to describe them as ‘quantitative and qualitative benchmarks’, which is adds almost nothing to the term ‘performance measures’, the ‘key performance measures’ are not identified.
    • The ‘Information on Directors’ is
      • missing their qualifications
        • Ministry comment: ‘We think our experience that is listed is much more relevant than any degrees/qualifications we all have from many years ago.’
      • no Board officers are identified, and
      • Johnson’s resignation doesn’t match the declaration at the beginning of the report.
    • It is missing a ‘Contributions on winding up’ paragraph.
    • If Buckpitt and Johnson were directors up to the date of the report, why were they not eligible to attend all the year’s board meetings?
      • Ministry comment: ‘Johnson resigned on 1 Jun as stated and so wasn’t eligible for 3 meetings and Buckpitt came on to replace Johnson.  This could have been explained more clearly by us.’

Auditor’s Independence Declaration…(page 4 of the Financial Report)

  • This is not required by the ACNC.
  • Ministry comment: ‘The Board will consider the detailed comments on rest of the financial report and take it into account for our FY 15/16 report which we are currently preparing’

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

  • It’s in the title but no ‘Other comprehensive income’ section is included in the statement.
    • Which is strange, for it was there last year.
  • The last section should not be included.
  • Revenue $1.54 m (including Note 2)
    • Revenue should be classified ‘sales’ or ‘other’.
    • Revenue from main operations $1.46 m
      • What qualifies something as being part of the ‘main operations’? ‘Bookshop Sales’ $11K is included yet the earnings on a $726K portfolio are not.
    • Donations Received $1.41 m
      • This is 91% of revenue.
      • There is no breakup of this figure, so a match, even at the fundamental level of programs (7) versus staff, is not possible.
      • 25 individuals or couples seek money on the website.
        • There is no explanation of how this money will be used, nor its relationship to other income they may be receiving.
        • Four of these ‘partners’ are not in the staff list.
        • We are not told whether the money donated to a person (or couple) goes to AN to offset the benefits AN gives the person, or is just handed on to them.
      • In the staff list, there are 16 staff additional to the ones to whom we are invite to donate on the website. There is no explanation for why, when they appear to be doing the same work as those seeking donations, they don’t qualify for the Donate button.
    • Bookshop sales $11K and Conference Income $36K
      • Gross profit is not shown, and there is insufficient information to calculate it.
    • Freight Collected
      • This is a non-standard treatment of freight.
  • Other revenue $83K
    • The last item should be ‘Other Other revenue’ to distinguish it from the heading.
    • Interest received $9K
      • How, if accrual accounting is used, is this amount (and that for last year) identical to the cash amount?
    • Investment Distributions Received $49K
      • Note the note. What about staff who fall on hard times? Don’t staff have to have their support raised before they start?
    • Unrealised Gain on Investments $5K
      • It appears that the investments are ‘Available-for-sale financial assets’, and their income should therefore not be included in revenue. It is part of ‘Other comprehensive income’ (a section that has been omitted).
    • Foreign currency Gain 8K
      • There is no explanation of this item, nor a policy note.
  • Other income $5K (including Note 2)
    • There is no ‘other income’ item in Note 2.

Expenses

  • This is a mixed classification of expenses.
  • Neither fundraising nor administration expenses are disclosed.
  • Nor is superannuation expense.
  • Employee benefits expense $719K
    • The home page says 80 staff, the staff list shows 74.
    • This represents 47% of revenue.
    • In October 2015 AN reported in its AIS 2015 that it had 26 full time and 10 part-time employees. How do these figures relate to 26 individuals or couples who seek donations on the website?
    • Assuming that part-timers work 50% of full-time, and using the AIS figures, the expense represents only $23K per employee.
  • Other expenses $580K
    • This means that for 43% of expenses there is no disclosure.

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

  • Cash and cash equivalents $333K (including Note 4)
    • When combined with the portfolio of trusts (see Note 8), this represents seven and a half months of revenue.
    • There is no explanation for why $102K is kept in a US bank account.
  • Trade and other receivables $6K (including Note 5)
    • There is no Note in Note 1 explaining the presence of a ‘Provision for impairment of debtors’ with a zero balance for both years.
  • Inventories $16K (including Note 7)
    • The Accounting Standards require inventories to be valued at the lower of cost or net realisable value, not cost.
    • There is no policy Note (Note 1).
  • Financial assets $726K (including Note 8)
    • This classification contravenes the Accounting Standards.
    • Why these units are held is not disclosed.
    • There is no explanation for why a ministry would hold 100% of its non-cash funds buffer – if that is what it is – in a moderate to high asset class.
    • There is no policy note (Note 1) explaining the accounting for this portfolio.
  • Property, plant and equipment $5K (including Note 9)
    • ‘Plant and equipment’ is not helpful as a class of property, plant and equipment. Computers?
    • AN hasn’t had any leasehold improvements for at least the last three years.
  • Trade and other payables $176K (including Note 10)
    • 90% of these liabilities are in one item, ‘Ministry Expense Account’, an item that is not typical, yet not explained.
      • There is also no explanation as to why it has doubled over last year.
    • The second section of the Note is not required, and adds little if anything.
  • Provisions $5K (including Note 11)
    • Last year’s Financial Report showed $77K of non-current employee entitlements. Why does the 2014 column this year show zero?
      • And why is there no balance this year?
    • ‘Analysis of total provision’: The wrong year is shown.
    • ‘Employee Provision’
      • There is no ‘Provision for employee benefits’ in the financial statements.
      • There is no ‘non-current portion’ in the statements.
  • Reserves $851K
    • Aren’t the second lot of funds, having been given by donors for a particular purpose, restricted funds?

How the wealth of the charity has changed – Statement of Changes in Equity (page 7 of the Financial Report)

  • ‘Other comprehensive income’ is missing.
  • The descriptor for the surplus is different to the one used in the profit or loss statement.

Where the cash came from and where it went to – the Statement of Cash Flows (page 8 of the Financial Report)

  • Cash flow from operating activities
    • Receipts from customers $1.50 m: ‘Customers’?
    • Three of the six line items are unnecessary.
    • With the exception of the small amount of interest, the figures in the 2014 column, without explanation, do not agree with last year’s Report.
  • Cash flow from investing activities
    • Two of the five line items are unnecessary.
    • The additions are incorrect in the 2014 column.
    • The total differs from last year.
  • Cash flow from financial activities
    • None of the four line items are necessary.
  • Net Increase/(Decrease) in Cash Held
    • The 2014 figure does not match what was published last year.
  • Cash at Beginning of Year: ‘Cash’ should be ‘Cash and cash equivalents’.
  • Cash at End of Year: ditto, plus the 2014 figure does not agree with last year’s accounts.

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

  • 1 Summary of Significant Accounting Policies
    • Basis of Preparation: the type of company and the function and presentation currency is missing.
    • Accounting Policies
      • (a) Revenue
        • No policy is included for conference income or investment income.
        • Ignore the first three paragraphs – AN hasn’t had any grants for at least the last three years.
        • Fourth paragraph: no services are sold – unless AN thinks that a conference ticket is a service.
      • (c) Property, Plant and Equipment: There are no leasehold improvements. (Nor have they had any for at least the last three years.)
      • (g) Employee Benefits: are there no contributions to defined contribution superannuation funds?
      • (l) Comparative Figures and (m) Economic dependence: voluntary disclosures.
    • Missing policy Notes:
      • New and revised Standards
      • Current and non-current classification
      • Trade and other receivables
      • Trade and other payables
      • Fair value measurement
  • 13 Operating Lease Commitments
    • The declaration of no lease commitments does not match, without explanation, the fact that there is an expense ‘Rental expense on operating leases’.
  • 14 Member’s (sic) Capital
    • There is no capital.
    • The total liability is not disclosed, nor is it calculable.
  • 15 Related Party Transactions
    • (i) Key management Personnel
      • There is no explanation for the substantial increase in the remuneration disclosed.
      • Who are the ‘Other related parties’?
      • The usual disclosure of transactions, receivables and loans is missing.
    • (ii) Other related parties
  • 16 Financial Risk Management
    • A voluntary disclosure.
  • Missing Notes
    • Commitments (even if there aren’t any)
    • Contingent liabilities (ditto)

An independent opinion on the financial statements: Independent Auditors (sic) Report… (page 22 of the Financial Report)

  • This is a ‘clean’ opinion. Read here and here to draw the right conclusions from this.
  • It appears that the auditor has rushed the conversion of last year’s report to this year’s: it is no longer true that the Financial Report is a special purpose financial report, and the ‘Basis of Accounting’ paragraph is no longer relevant.
  • He’s also rushed the signing – it should happen after the directors sign, not before.

Membership of accountability organisations claimed

  • Missions Interlink (bottom right here). Confirmed (but with a slightly incorrect name).

(End of review)

  1. 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.’
  2. 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.
  3. I use the Pinnacle Financial Statements, respected in the profession as providing a very sound basis for producing compliant financial reports. To this I add an assessment of materiality (both quantitative and qualitative), where the users being considered are donors.

Church Missionary Society – Tasmania Inc, charity review

This is a charity review, a review for those with an interest in the Australian charity Church Missionary Society – Tasmania Inc (CMS-T).

It is structured according to the charity’s entry on the ACNC Register, and its purpose is to supply some information extra to what is there, information that may be helpful in your decision about CMS-T.

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 20 June 2016, and invited them to comment. They sent a few comments – which have been included below – and asked for more time, but then I heard nothing more from them.

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.

Sources

  • ACNC Register (including links)
  • Google search on the charity’s name.
  • CMS-T’s share of a website.
  • Facebook. No other social media, including LinedIn.
  • Not on LinkedIn.
  • State government fundraising licence registers.
  • No reviews on Glassdoor.

REGISTRATION DETAILS

Entity Subtype

  • A subtype that supports the sharing of the Gospel.
  • Such sharing is primary in the constitution:
    • The object of the Branch is to work within the state of Tasmania for the coming of God’s Kingdom through the proclamation of the Gospel of Christ throughout the world in fellowship with local churches…

CHARITY DETAILS

Legal Name

Other Name(s)

  • This is not a business name, and CMS-T holds no business names, so should always be using its full name.

Charity ABN

  • Tax deductibility: No, you cannot claim a tax deduction for a donation to CMS-T.
    • How they were able then to receive $15K in ‘Tax Deductible Funds’ (see below), is not explained.
      • Ministry comment: ‘CMS-T collects and transmits under CMS-Aust ABN’s for tax deductible funds.  This is then transmitted as part of the Federal Budget contribution.

Charity Street Address

  • This should be a street address. From the website: 23 Clarence St BELLERIVE TAS 7018.

Email

  • I have no reason to believe that this does not work.

Phone

  • Not on the website.
  • From white pages : (03) 6244 3926.
    • There also an entry for one of the two properties owned by CMS-T, marked ‘Residence’.
      • Ministry comment: ‘This residence at 40 Lindhill Avenue, Geilsten Bay was purchased to house our State Director.  Currently this position is vacant and we are seeking a new SD.  In the interim this property has been rented out.’

Website

  • Not one of its own, but a page on Church Missionary Society – Australia’s site.

ANNUAL REPORTING

  • AIS 2015
    • This is CMS-T’s compulsory Annual Information Statement 2015 (AIS 2015).
    • It gives basic financial information. If you think that this might be sufficient for you
      • Note that the statements are the type that do not have to follow all the Australian Accounting Standards.
      • Every figure in the Income Statement is incorrect:
        • ‘Donations and bequests’ should be $209K.
        • ‘Total Gross Income’ should be at least $331K – ‘at least’ because the ‘SummerView’ expenses have been netted against the ‘SummerView’ revenue.
        • ‘Employee expenses’ are marginally understated.
        • ‘Grants and donations…’ are understated by $15K.
  • Financial Report 2015
    • The accounts were signed only one month after year. But were not audited for another one and a half months.
      • Ministry comment: ‘We have been requested to approve the accounts at a State Council level before submission to the auditor.  The auditor then completed the audit before the AGM at the end of September 2015.  I have no control over when his firm completes the audit, and don’t see what the problem is, as long as he meets his deadline.
        • Reviewer response: The accounting profession believes that timeliness is a constraint on relevant and reliable information. Both the timing of the audit and the timing of the AGM are within the control of the charity.
    • The Report was then lodged nearly five months after that, two weeks beyond the (extended, for all charities) due date.
      • Ministry comment: ‘That was my fault (CJA)’
    • The coverage of finances in this review is left until the financial report proper (see Latest financial report – detail, below). (Go straight there.)

ABOUT THE CHARITY

  • Statement of Faith
    • There isn’t one on the website.
    • CMS-T’s ‘principles’ in its constitution refer you elsewhere:
      • The Branch is part of a voluntary society of members of the Anglican Church of Australia and is based upon those evangelical and Protestant principles which have been universally recognised as the principles of the Parent Society [‘the Church Missionary Society founded in England on 12 April 1799 and its successors in law] from its foundation.
      • Unfortunately these principles do not appear to be on the CMS_UK website.

Date Established

  • No history found.
  • I expect that CMS-T is mentioned in the history on the CMS-A website.
    • Ministry response: For a history of CMS-T refer to chapter 14 (pp 279-298) in “A History Of The Church Missionary Society of Australia” by Keith Cole, Church Missionary Historical Publications, 1971 (ISBN 0 909821 02 X)

Who the Charity Benefits

  • Vision
    • Our vision is to see God’s Church growing at home and abroad as lives and communities are transformed by Christ.
  • Mission
    • Nothing separate to CMS-A.
  • Activities (What did CMS-T do?)
    • In the AIS 2015:
      • Education throughout Tasmania about cross cultural Christian mission. Identifying and endorsing suitable candidates for cross cultural Christian ministry. Support of missionaries in cross cultural service through the Church Missionary Society Australia Ltd.
        • This is identical to what appears in last year’s AIS, so is not specific to 2015, as expected by the ACNC.
        • Ministry response: ‘That is our task.  We follow a similar pattern each year.’
    • The website shows what’s upcoming.
  • Outcomes (What did CMS-T deliver?)
    • CMS-T did not respond to the request in the AIS for its outcomes.
      • Ministry response: ‘We continue to support 2 missionary units.’
    • Nothing systematic found.
  • Impact (How were people’s lives improved?)
    • Nothing systematic found.

Size of Charity

  • CMS-T is nowhere near the threshold for the next size (the largest).

Financial Year End

  • This means that the next financial report is due by 31 December 2016 – or 31 January if the ACNC again gives its (generous) extension (to all charities). Before that the financial information on the Register will be up to 18 months out-of-date.
    • You may therefore need to ask for more up-to-date information.

WHERE THE CHARITY OPERATES

Operating State(s)[1]

  • Because there are CMS branches throughout Australia, and because CMS-T is an Anglican mission, presumably most of their ‘contributions’ come from Tasmanian Anglican churches and Tasmanian Anglicans. However, it doesn’t have a fundraising licence in Tasmania.
  • CMS-T calls for donations on their website.
    • They do not have a fundraising licence in any of the other six states that have a licensing regime.

Operates in (Countries)

  • Excluding the effect of the note on the website that “CMS supports a number of other missionary units who are not listed for security or privacy reasons”, ‘Spain’ matches the information on the website.

CHARITY’S DOCUMENT (SIC)

  • An Annual Report/Review can be lodged on the ACNC Register, but CMS-T hasn’t done this.
  • Nor is there one on the website.

RESPONSIBLE PERSONS

No. of Australian ‘responsible person’ positions[2]

Craig Arnold                   2

Anita Booker                  2

Michael Guerzoni          1

Francis Lee-Jones         1

Suzanne Morton            1

James Oakley                 2

Elizabeth Richie             2

Robert Stanley                9 (but potentially five duplicates)

Leonie Stiltz                    2

  • The directors are not shown on the website.
  • The board is four short of the number required by the constitution.
    • Ministry response: ‘Currently vacant.
  • Under ‘Position’:
    • What is the distinction between ‘Board member’ and ‘Committee member’?
      • Ministry comment: ‘They’re the same.  ACNC changed their drop-down-menu terminology.’
    • The constitution also requires a President and a (Branch General) Secretary.
      • Ministry comment: ‘The Branch General Secretary is designated the State Director and is currently vacant.  We are looking to appoint a new SD.’

(End of review of the ACNC Register information)

Latest financial report – detail[3]

  • CMS-T is subject to the accountability of Missions Interlink (see last section below).
  • The auditor, Geoffrey Powell, gives a confusing opinion.
  • And does not mention that what he audited are special purpose financial statements.
  • The directors believe that a special purpose financial report is acceptable. (And so does the auditor.) This choice allows them to make less than a full disclosure about CMS-T’s finances and operations, and is implicitly a statement that any current or prospective user is able to command the preparation of a financial report tailored to their needs. Do the directors realise they are saying this?
  • One of the required set of four statements is missing: the Statement of changes in equity.
  • The Income and Expenditure Statement deviates materially from what is required by the Accounting Standards.
  • Buildings are not depreciated.

What was earned, what was consumed during the year – the Income and Expenditure Statement (page 1 of the Financial Report)

  • This statement is far from compliant with the Australian Accounting Standards:
    • The result of CMS-T’s major annual event, SummerView, is included as a single figure, thereby understating both revenues and expenses.
      • Ministry comment: ‘For GST purposes SummerView is operated as a sub-entity, thereby not requiring the reporting of GST income or expenses in the BAS statement.
    • The statement is missing an ‘Other comprehensive income’ section, a section that has been required for a good while now.
    • Transfers to reserves are included. (They should be in the statement that CMS-T have omitted.)
    • Revenue is not disclosed, and then sales revenue versus other revenue.

Income

  • Tax Deductible Funds $15K
    • How is this possible when donations are not eligible for a tax deduction?
      • Ministry comment: ‘CMS Branches collect tax deductible donations on behalf of CMS-Aust under CMS –Aust ABN numbers.  They are transmitted as part of the CMS-Aust Federal Budget contribution.’
        • Reviewer response: Income is therefore overstated by this amount.
  • Bequests & Endowments $6K, including Note 5
    • ‘Contributions’ include bequests and endowments, so why separate them?
  • Rent…$99K
    • This is 30% of (reported) income.
    • This is an ongoing item, so why aren’t the properties classified as investment properties?
  • Stamp Sales
    • Why no cost of goods sold and inventory?

‘Less Expenditure’

  • It would be reasonable to see administration, finance and fundraising expenses disclosed. They aren’t.
  • It appears that CMS-T does not itself give.
  • Federal Budget (including Tax Deductible Funds) $134K
    • There is no explanation of this unusual item – or the note.
  • State Director/Worker $49K
    • This does not match the declaration, in the AIS 2015, of the number of employees.
    • Does this item have the same definition as the Accounting Standards’ ‘Employee benefits expense’.
  • Administration CMS Victoria Inc. $29K
    • There is no explanation of this item.
    • How it the amount calculated?
    • How does it relate to the other administration expenses?
  • Database Costs $6K
    • This seems unusually large.
    • How does it relate to fundraising expense (undisclosed)?
  • Building Expenses…$26K
    • If Provision for Maintenance (see below) is a genuine provision, why isn’t the expense included here?
  • Provision for Maintenance
    • A provision is not an expense.

Branch Operating Surplus

  • This implies that there are ‘non-operating’ items, but none are shown.

SummerView Operating (Deficit) / Surplus

  • This should be included via the event’s revenue(s) and expenses, not as a single item.

Allocation from/(to) Reserves and Bequests & Endowments (including Note 2)

  • This is not a legitimate inclusion.

What’s left at the end of the year – the Assets and Liabilities Statement (page 2 of the Financial Report)

  • Not a usual title for this statement.
  • Two of the additions are incorrect.
  • No non-current liabilities?
  • Retained Surplus $196K, including Note 3
    • How is SummerView not part of Tasmania Branch?

Current Assets

  • These should be in order in liquidity.
  • The first two assets don’t match the policy described in Note 1f.
  • Cash at Banks $51K, including Note 6
    • This should be ‘Cash and Cash Equivalents’, as per the policy note.
  • Deposits with Trustees of Diocese of Tasmania $509K, including Note 7
    • The note says these are ‘investments’, but that is a separate asset (that should be subdivided according to the Accounting Standards.)
    • If any of these are for three months or less they should be included under ‘Cash and Cash Equivalents’. As per the policy note.
    • Together with ‘Cash at Banks’, this represents 20 months of revenue.
    • Why is so much money held?
  • SummerView
    • What is this as an asset?

Non-Current Assets

  • These should be under an asset called ‘Property, plant & equipment’ – as is acknowledged in the Cash Flow Statement.
  • Computers & Equipment $4K, including Note 8
    • Each class of property, plant and equipment should be separately depreciated.
    • Why are second and third items not part of the building?
    • ‘Residual value’, the ‘bottom line’ in the note, is something quite different to Written down value, the descriptor that should be here.
  • Freehold Property $1.09 m, including Note 1
    • This should have a Note of its own, not within the policy note.
    • The valuation basis should be disclosed.
    • Why hasn’t depreciation been charged on the building?

Current Liabilities

  • No employee benefits?
  • Interest Free (sic) Loans $58K
    • With so much short-term money being held, why the need for loans?
  • Provision for Maintenance
    • How does comply with the CMS-T policy described in Note 1e?

Essential information to go with the figures – the Notes to the Financial Statements (page 3 of the Financial Report)

  • Note 1 :Summary of Significant Accounting Policies
    • Missing information:
      • Why the directors think that CMS-T is not a reporting entity.
        • The implication of their decision is that they think that all those currently involved with CMS-T, plus all those who might become involved as a result of CMS-T’s promotions and website, can get a financial report tailored to their particular needs.
      • The accounting standards complied with.
      • The relationship between the authority under which they are registered (the ACNC), and the requirements they have complied with (Tasmanian associations legislation).
      • Individual entity? Not-for-profit?
      • Functional and presentation currency.
      • The date the accounts were authorised for issue.
    • b. Property, Plant and Equipment
      • Missing: the useful lives adopted, policies on the review of the depreciation factors and the derecognition policy.
      • Aren’t the rates based on the land value, not the property value?
    • d. Employee Benefits
      • Why are there are none in the Assets and Liabilities Statement.
      • What are these benefits?
      • There is normally a distinction between short-term and long-term benefits.
    • g. Revenue and Other Income
      • What about the policy for rent, the second largest item?
      • On what are dividends received?
    • H. Goods and Services Tax (GST)
      • What about cash flows? Commitments and contingencies?
    • Missing policy Notes:
      • New, revised or amending Accounting Standards and Interpretations adopted
      • Current and non-current classification
      • Impairment of non-financial assets
      • Fair value measurement
      • Trade and other payables
      • Trade and other receivables
      • New Accounting Standards and Interpretations not yet adopted
  • Notes normally included, even if the amount etc is zero, but missing here:
    • Critical accounting estimates, judgements and assumptions
    • Contingent liabilities
    • Commitments
    • Events after the reporting period
    • Remuneration of auditors

Where the cash came from, where it went – the Cash Flow Statement (the sixth page of the Financial Report)

  • One would have expected that with the use of the accrual basis for interest on $560K of deposits, the cash amount here would differ from the amount in the Income Expenditure Statement.
  • Does the amount for ‘Purchase of property, plant and equipment’ reconcile to the changes in the Assets and Liabilities Statement?
  • The amount for ‘Support for annual convention…’ does not match the change in the balances in the Assets and Liabilities Statement.

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

  • Although part a) of his opinion matches the wording for a ‘clean’ opinion, he contradicts this in part b) by saying that (the financial statements) ‘do not comply with adequate Accounting Standards’.
  • Should you conclude that it is still an unqualified opinion, you should read here and here to take the right amount of comfort from that finding.
  • Why has the auditor excluded the Cash Flow Statement from his audit?

Membership of accountability organisations claimed

(End of review)

 

 

  1. 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.’
  2. 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.
  3. I use the Pinnacle Financial Statements, respected in the profession as providing a very sound basis for producing compliant financial reports. To this I add an assessment of materiality (both quantitative and qualitative), where the users being considered are donors.

The Archbishop Of Sydney’s Overseas Ministry Fund, charity review

This is a charity review, a review for those with an interest in the Australian charity The Archbishop Of Sydneys (sic) Overseas Ministry Fund (ASOMF).

It is structured according to the charity’s entry on the ACNC Register, and its purpose is to supply some information extra to what is there, information that may be helpful in your decision about ASOMF.

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 25 April 2016, and invited them to comment. Their responses that remain relevant are included throughout the review.

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

  • ACNC Register (including links)
  • Google search on the charity’s name
  • The website belonging to Anglican Aid (see Legal Name, below).
  • Not on social media, or LinkedIn.
  • State government fundraising licence registers.
  • No reviews yet on Glass Door. (Nor for Anglican Aid.)

REGISTRATION DETAILS

Entity Subtype

  • A subtype consistent with sharing the Gospel.
  • According to the trust deed (see Charity’s Document (sic), below) the purpose is ‘the development of ministry by providing assistance to persons and organisations’. These persons and organisations may be sharing the Gospel.

CHARITY DETAILS

Legal Name

  • ASOMF is an unincorporated body, a trust fund, that was established by (redacted on the deed, but presumably the Archbishop of Sydney at the time) in 2000.
  • Not to be confused with the Archbishop’s other four charities:
  • The first, trading under the unregistered name Anglican Aid, is ASOMF’s trustee.
  • Anglican Aid is the trustee of the second charity.
    • Given that Anglican Aid runs its own operations and its trusteeships from the one office, reports on them in its Annual Report as its ‘three funds’, and all three charities have the same directors, one wonders why
      • they don’t present consolidated financial statements, especially as the canon law governing their financial reporting requires a ‘charities group status report’ for Synod using the criterion for consolidation that is in the Australian Accounting Standards, and
      • they don’t take advantage of the ACNC Act’s group reporting provisions, thus simplifying their reporting requirements to the ACNC (both Annual Information Statement and Financial Report).
  • The third charity has one responsible person, the Archbishop. He controls the income, the Archbishop-in-Council the capital.
    • Ministry response: ‘This entity is unrelated to ASOMF’
  • The last charity has a company trustee, itself a charity, NCNC Funds Limited. It has three directors, but they sit at the will of the single member, the Archbishop.
    • Ministry response: ‘This entity is unrelated to ASOMF’

Charity ABN

  • Tax deductibility: No, you can’t claim a tax deduction for a donation to ASOMF .

Charity Street Address

  • No postal address separate to that of its trustee (from its website): PO Box Q190, QVB Post Office NSW 1230

ANNUAL REPORTING

  • AIS 2015
    • This is ASOMF’s compulsory Annual Information Statement 2015 (AIS 2015).
    • Why has Anglican Aid, the trustee, not taken advantage of the group reporting provisions of the ACNC Act?
      • Ministry response: ‘Will consider at time of next lodgement’
    • The AIS was submitted five and a half months after year end, two weeks before the normal deadline.
      • Ministry response: ‘Submitted within initial time allowed – will seek to lodge earlier in 2016
    • It gives basic financial information.
      • This information agrees with the Financial Report.
  • Financial Report 2015
    • It is its status as a ‘Basic Religious Charity’ that makes this not required.
    • However, when I requested the Report, it was sent quickly. And it is now lodged.
    • The Report was signed two months after year end.
      • Ministry response: ‘Allowing time to complete accounts, have them audited and presented to Board meeting
  • 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
    • There is no statement of faith in the governing document (see Charity’s Document (sic), below).
    • Nor, I think (no search function), on the trustee’s website.
      • Ministry response: ‘Correct – will be reviewed – As an aside, Board members are required to sign a statement of faith’

Date Established

  • The only history on the trustee’s website has the date a year earlier (at the bottom here).
    • Ministry response: ‘To be reviewed to ensure correct’

Who the Charity Benefits

  • Vision and Mission
    • None found.
  • Activities (What did ASOMF do?)
    • From the Description of charity’s activities and outcomes in the AIS 2015:
      • The charity supported some 281 students in 9 African countries by providing bursaries and scholarships for theological education. The fund receives donations from supporters which are not tax deductible.
        • It appears that this training of people to share the Gospel as part of their future work, rather than directly sharing the Gospel, is the entire mission of ASOMF:
          • Ministry response: ‘Correct
          • It exists to help ministries in the developing world by providing financial support for Bible training.
  • Outcomes (What did ASOMF deliver?)
    • ASOMF did not respond to the invitation in the AIS for a description of its outcomes.
      • Ministry response: ‘Will review this opportunity for 2016’
  • Impact (How were people’s lives improved?)
    • Nothing systematic found.
      • Ministry response: ‘Will review this opportunity for 2016’

Financial Year End

  • This means that the next AIS is due by 31 December 2016 (or 31 January 2017 if the ACNC is generous again.)
  • Before that the financial information on the Register will be up to 18 months out-of-date.
    • You may therefore want to seek more up-to-date information.

WHERE THE CHARITY OPERATES

Operating State(s)

  • ASORAF is exempt from the fundraising licence requirements in this state.
  • However, it raises funds all over Australia, so probably has to comply with the fundraising legislation elsewhere. No fundraising licences are held.
    • It is possible that it is exempt in Victoria, but what about in the other six states that have a fundraising regime?

Size of Charity

  • ASOMF is only $41K under the threshold for ‘Medium’. (It’s expenses were $17K over though.)

CHARITY’S DOCUMENT (SIC)

  • Why is the governing document for ‘ASOMF ‘Rules’, whereas the one for the other fund for which Anglican Aid is the trustee is a deed?
    • Ministry response: ‘The other Fund’s governing document (formerly a Trust Deed) was updated for governance and compliance reasons during 2015. ASOMF’s governing document (the Trust Deed) will be reviewed in due course – not as important due to non-tax deductibility of donations, size and non-member of ACFID’
  • There is no Annual Report/Review available on the ACNC Register.
    • Ministry response: ‘We have since lodged – not required, but we want to be transparent’
      • Reviewer comment: There’s still nothing on the Register.
  • There is an Annual Report on the trustee’s website, but it is for the group, not just ASOMF.

RESPONSIBLE PERSONS

No. of Australian charity directorships in this name

David Dennis                4

Brett Hall                       6

Douglas Marr              10

John Menear                 3

Emma Penzo                 8

Peter Rogers                 9

Robert Stewart             9

Peter Tasker                 5

Keith Walker                7

  • A listing that matches the one on the trustee’s website.
  • You would be right to question whether those directors with a large number of directorships – and remember, this is only the number for charities, not all organisations – have enough time to satisfactorily discharge their responsibility under the law for each one.
  • No reason was found for the ‘Positions’ to vary between ‘Board Member’, ‘Director’, and ‘Other’.
    • Ministry response: ‘Historical only – there is no difference in substance’

(End of review of the ACNC Register information)

Latest financial report – detail

  • The financial statements are produced to the lower standards of special purpose statements. Is it really the case that all current and prospective stakeholders have the ability to request ASOMF to produce for them financial reports tailored to their individual needs?

What was earned, what was consumed during the year – the Statement of Profit or Loss and Other Comprehensive Income (page 3 of the Financial Report)

  • Donations $209K, including Note 3
    • This represents 99% of income.
    • Insufficient detail to compare the revenue with the giving options on the website.
    • No bequests were received.
  • Revenue from Ordinary Activities
    • The distinction between ordinary and extraordinary has been long gone from the Accounting Standards.
    • A different description is used in the Statement of Changes in Distributable Funds and Reserves.
  • Grants Paid $195K, including Note 5 (and Notes 4 and 6)
    • Note 4 Donations Received and Grants Paid $195K
      • This represents 94% of Donations. See Note 4 for how this was possible.
      • The heading doesn’t match the content.
        • Ministry response: ‘Only Designated donations (Designated Purpose receipts) are shown in Note 5’
      • Is there a way of classifying the information in this long list to make the information more useful? By size? By country?
        • Ministry response: ‘Will consider format in 2016 accounts’
  • Fund Management Services and other Operating Expenses $72K, including Note 7
    • These represent 27% of expenses.
    • For those expenses that are not disbursements by the trustee, how is it that the figures are so precise?
      • Ministry response: ‘Most costs are apportioned by Trustee on a % basis as approved by the Board at the beginning of the financial year based on projected income – ASOMF income was short of budget, however costs were charged on basis formerly approved. Other costs (audit, Bank charges) are actuals for ASOMF’
    • How does the trustee decide how much to charge?
      • Ministry response: ‘Budget approved by Board on basis on projected income with costs distributed amongst the three funds at the level then approved – this will change in 2016, where percentage will be based more on actual income, rather than budgeted’
    • Personnel Costs $42K
      • Is this the same as ‘employee benefits’ in the Accounting Standards?
        • Ministry response: ‘Covers wages, salaries, allowances, superannuation etc’
      • This represents 16% of expenses.
      • Assuming that part-timers work 50% of full-time hours, and based on the number of employees disclosed elsewhere in the AIS (four part-timers), this represents $21K per employee.
    • Fundraising Costs –$14K
      • This represents 5% of expenses.
    • Missing disclosures:
      • Administration. Note 1(e) equates the $72K of this item with ‘Administration Expenses’. But ‘administration’ doesn’t normally include, for instance, fundraising expense.
        • Ministry response: ‘Noted for 2016’
    • There are no ‘Fund management service fees’ in the list, as implied in the note.
      • Ministry response: ‘Noted for 2016 – traditionally, the “Fund Management Fee” has been split into actual expenses by group with each major cost shown separately – we will not do this in 2016’

Where the cash came from and went to – the Statement of Cash Flows (page 6 of the Financial Report)

  • Donations $209K: given the recognition policy, how is it that the cash received is identical, both years, to the revenue earned?
    • Ministry response: ‘Quite right – co-incidence only’
  • If accrual accounting is used,
    • why is interest received identical to interest revenue?
      • Ministry response: ‘Because of small sum we show only actual interest received and not any accrued’
      • is it correct that grant payments totalling $195K to multiple recipients were identical to the same grants as expenses?
  • Why is the repayment of the loan an operating activity?
    • Ministry response: ‘This represented a payment made by ASOMF in error just prior to end of financial year – was reimbursed by ASORAF in July 2015

Essential information to go with the figures – the Notes to the Financial Statements – page 7 of the financial report

  • Contents
    • As the majority of the Notes are keyed to the statements, is there a need for this page?
  • 1 Summary of Significant Accounting Policies Adopted in the Preparation of the Financial Report
    • (a) Reporting Entity
      • Missing information:
        • ‘as an individual entity’
        • The date the accounts were authorised for issue.
      • The directors do not say why they think that ASOMF is not a reporting entity.
      • Do the directors realise that they are effectively saying that all those people who have donated the $209K, and all those people who might donate in the future, are able to require ASOMF to produce a financial report to suit their particular information needs?
      • It is the requirements of the ACNC Act that determine the reporting.
      • Critical accounting estimates:
        • Do they mean ‘IFRS’? If so, don’t their financial statements follow the Australian Standards, not the International ones?
        • It is common for critical estimates to be involved in employee benefits. This is not the case for ASOMF?
          • Ministry response: ‘They don’t have any employees as such’
    • (b) Statement of Compliance: ‘classification aspects’?
    • (c) Cash and Cash Equivalents: up to what length for the term deposits?
    • (d) Revenue Recognition: what about interest?
      • Ministry response: ‘Correct, although any interest accrual would be modest’
    • (e) Administration Expenses:
      • There are no ‘Fund Management Services’ separately shown.
        • Ministry response: ‘See above – we will change in 2016’
      • Direct expenses would not need apportionment.
      • Does the basis for apportionment vary from item to item?
        • Ministry response: ‘Apportioned on basis of projected income – we will change in 2016 to a proportion based on actual income’
    • (g) Goods and Services Tax (GST): cash flows and commitments and contingencies are missing.
    • Missing policy Notes:
      • Current and non-current classification
        • Ministry response: ‘No non-current assets or liabilities’
      • Property, plant and equipment. (It is unusual not to have any.)
        • Ministry response: ‘There is none’
      • Employee benefits
        • Ministry response: ‘No employees’
      • Fair value measurement
    • Ministry response: ‘We will further consider format and contents of notes generally in the 2016 accounts’
  • Adoption of New and Revised Accounting Standards
    • How has the impact been assessed as immaterial when the evaluation hasn’t been completed?
      • Ministry response: ‘Wording could be improved’
    • Is this meant to be Note 2?
      • Ministry response: ‘Good point’
  • 11. Funds Available for Distribution
    • Grants Paid doesn’t match Notes 4 and 5
      • Ministry response: ‘Total correct, however, all but $500 should be designated purpose’
  • 13 Commitments for Expenditure
    • See the comment on Note 4
      • Ministry response: ‘Will review in 2016 year accounts’
  • 14 Related Parties
    • Don’t the rules give control of the fund to the Management Committee, whose membership is drawn from Anglican Aid, not the Archbishop?
      • Ministry response: ‘Comment acknowledges ultimate power of the Archbishop’
    • If the Archbishop is in control, then aren’t all the other entities that he controls also related parties?
      • Ministry response: ‘Only because Archbishop at top – there is otherwise no interconnection between the three Anglican Aid Funds and other Diocesan Organisations’
    • Doesn’t Anglican Aid provide ‘administration and staffing’ because it is the trustee, not in addition to its role as trustee?
    • Isn’t some of what Anglican Aid charges an allocation of a larger figure, not just the reimbursement of expenses?
      • Ministry response: ‘Yes – see above – expenses apportioned on basis of projected income of the three funds’
    • The dollars don’t match those in Note 7.
      • Ministry response: ‘Note 14 was the Fund Management Fee component of note 7, other costs included direct Bank fees, audit fees and certain fundraising cost attributable to ASOMF- we will look to clarify in 2016 accounts’
  • Missing Notes
    • Remuneration of auditors
      • Ministry response: ‘Only included in note 7’
    • Contingent liabilities (it being usual to say if there aren’t any)
      • Ministry response: ‘Noted – there aren’t’

Where the directors put their name to the report – the Members’ Declaration (page 15 of the Financial Report).

  • This declaration doesn’t comply with the ACNC’s requirements.
  • The declaration below this one is not required by the ACNC.
  • Ministry response: ‘Noted’

Membership of accountability organisations claimed

  • Anglican Aid has ‘ACFID Member’ and the Missions Interlink (MI) ‘Accredited Member’ logo in its website footer. The MI membership is in the name Anglican Aid Overseas Ministry Fund, which is ASOMF. Confirmed.
    • Ministry response: ‘.   ‘…we will review wording 2016

(End of review)

 

Church Missionary Society Victoria Inc, charity review

This is a charity review, a review for those with an interest in the Australian charity Church Missionary Society Victoria Inc (CMS-V).

It is structured according to the charity’s entry on the ACNC Register, and its purpose is to supply some information extra to what is there, information that may be helpful in your decision about CMS-V.

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 11 June 2016, and invited them to comment. After initially seeking an extension of time to respond, they then declined the offer of more time, deciding to not submit a response.

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.

Sources

  • ACNC Register (including links)
  • Google search on the charity’s name.
  • CMS-V’s share of a website.
  • Facebook. Vimeo. No other social media.
  • Not on LinkedIn.
  • State government fundraising licence registers.
  • No reviews on Glassdoor.

REGISTRATION DETAILS

Entity Subtype

  • ‘Advancing religion’ would seem to be the right selection according to the constitution:
    • The object of the Branch is to work within the state of Victoria and Tasmania for the coming of God’s Kingdom through the proclamation of the Gospel of Jesus Christ throughout the world in fellowship with local churches…

CHARITY DETAILS

Legal Name

  • CMS-V is a Victorian incorporated association (A0032305D).
  • It is a mission agency of the Anglican Church (see page 27 here).

Other Name(s)

  • No business names are held, so CMS-V should always be using its full name.

Charity ABN

  • Tax deductibility: No, you cannot claim a tax deduction for a donation to CMS-V.

Charity Street Address

  • Postal address, from the website: PO Box 2150, Rangeview, Victoria, 3132

Phone

  • From the website: (03) 9894 4722.

Website

  • Not one of its own, but a page on Church Missionary Society – Australia’s site.

ANNUAL REPORTING

  • AIS 2015
    • This is CMS-V’s compulsory Annual Information Statement 2015 (AIS 2015).
    • It gives basic financial information. If you think that this might be sufficient for you
      • ‘Total revenue’ (and ‘Total Gross Income’) should be $2.36 m. (Which means that ‘All other revenue’ is similarly understated.)
      • ‘Employee expenses’ should be $634K.
      • There is insufficient disclosure in the income statement to confirm the two grants figures.
        • Their total is $27K short of the amount transferred to CMS-A.
  • Financial Report 2015
    • The accounts were signed three and a half months after year.
    • The Report was then lodged another three and a half months after that, two days before the (extended) deadline.
    • The coverage of finances in this review is left until the financial report proper (see Latest financial report – detail, below). (Go straight there.)

ABOUT THE CHARITY

  • Statement of Faith
    • There isn’t one on the website. But as a branch of CMS-A, it is required to ‘act in accordance with the CMS-A Principles and Objects, as contained in the CMS-A Constitution’. So that charity’s statement would apply.
      • CMS-A doesn’t have a conventional statement of faith on its website, but there is a short statement of what they believe under ‘Our Foundations’.
      • The Apostles’ Creed is the ‘Statement of Faith’ in CMS-A’s constitution (Schedule 2).

Date Established

  • No history found. They do have archives though.
  • I expect that CMS-V is mentioned in the history on the CMS-A website, and in this book.

Who the Charity Benefits

  • Vision & Mission
    • Nothing separate to CMS-A.
    • Under ‘Our Goal’ on the website:
      • CMS Victoria is a network of members, supporters, churches and missionaries working together to see lives transformed by the Gospel message. We are passionate about supporting world mission, raising up and equipping workers to spread the gospel abroad. Our vision is for a world that knows Jesus.
  • Activities (What did CMS-V do?)
    • In the AIS 2015:
      • CMS workers have continued to serve as co-labourers with over 100 international partners, including churches, schools, universities and Christian organisations, in more than 35 countries around the world. Our partners are involved in ministries that fit with our gospel vision and purpose. Our partners have welcomed CMS workers into their programs and ministries to share the lasting hope of Jesus Christ with people. We have continued to encourage churches and individuals in VIC to get involved in cross-cultural mission. CMS is a deductible gift recipient for provision of overseas aid in several countries, for aboriginal work in North Australia and in support of St Andrews Hall, the CMS training college in Victoria.
        • Apart from substituting ‘churches and individuals in VIC’ for ‘six branches across Australia’, and the deletion of a paragraph about the Sydney office, this is identical to what appeared in CMS-A’s AIS two years ago. So nothing specific about either CMS-V’s activities, or 2015’s activities, as requested.
    • Current activities are described on the website, and past activities in the Branch Matters newsletter.
  • Outcomes (What did CMS-V deliver?)
    • CMS-V did not respond to the request in the AIS for its outcomes.
    • Nothing systematic found.
    • I’m sure there would be some anecdotal information in the Branch Matters newsletter.
  • Impact (How were people’s lives improved?)
    • Nothing systematic found.
    • I’m sure there would be some anecdotal information in the Branch Matters newsletter.

Size of Charity

  • CMS-V is $1.61 m over the threshold for this size (and it is the largest).

Financial Year End

  • This means that the next financial report is due by 31 December 2016 – or 31 January if the ACNC again gives its (generous) extension (to all charities). Before that the financial information on the Register will be up to 18 months out-of-date.
    • You may therefore need to ask for more up-to-date information.

WHERE THE CHARITY OPERATES

Operating State(s)[1]

  • Although, at least from this information, it doesn’t operate interstate, CMS-V nevertheless is a Registered Australian Body (603 583 624).
  • CMS-V’s donations come principally from ‘parishes and individuals’. However, because there are CMS branches throughout Australia, and because CMS-V is an Anglican mission, presumably most of this money comes from Victorian Anglican churches and Victorian Anglicans. However, it doesn’t have a fundraising licence in Victoria.
  • CMS-V calls for donations on their website.
    • They do not have a fundraising licence in any of the other six states that have a licensing regime.

Operates in (Countries)

  • This does not match the information on the website.

CHARITY’S DOCUMENT (SIC)

  • An Annual Report/Review can be lodged on the ACNC Register, but CMS-V hasn’t done this.
  • Nor is there one on the website.

RESPONSIBLE PERSONS

No. of Australian ‘responsible person’ positions[2]

Kirsty Brown                   7

Bob Browne                     1

Graeme Chiswell             2

Simon Koefoed                1

Wei-Han Kuan                1

Peter North                      3

Jane Peters                       1

Roslyn Schnerring          4

John Sugars                     7

Pam Thyer                        6

  • This matches the directors listed on the website.
  • Under ‘Position’:
    • What is the distinction between ‘Board member’ and ‘Other’?
    • The constitution requires a President, Chairperson, Deputy Chairperson (or two), and a Treasurer.

(End of review of the ACNC Register information)

Latest financial report – detail[3]

  • The directors believe that a special purpose financial report is acceptable. This choice allows them to make less than a full disclosure about CMS-V’s finances and operations, and is implicitly a statement that any current or prospective user is able to command the preparation of a financial report tailored to their needs. Do the directors realise they are saying this?

What was earned, what was consumed during the year – the Statement of Income and Expenditure and Other Comprehensive Income (page 1 of the Financial Report)

  • The list here is of expenses, not revenue as might be first thought (due to the lack of a heading).

Revenue ‘from operating activities’ $2.36 m, including Note 2

  • Operating and non-operating is neither a helpful nor a current distinction.
  • The slightly different distinction, between ‘Operating activities’ and ‘Other Income’, in Note 2 is also not correct. It should be ‘Sales revenue’ and ‘Other revenue’.
  • There are two ‘Other Income’s shown. Confusing.
  • Why is ‘Gain on sale of investments’ shown in one section but ‘Net surplus from sale of property’ in another?
  • Contributions from parishes and individuals $1.55 m
    • There is no sub-total for donations and bequests – they are not even collected together – but it is $1.76 m.
  • Estates and trusts income $192K
    • Aren’t these from individuals too?
  • Investment income $245K
    • What return was achieved by the external managers of the $3.13 m investment portfolio?
  • Legacies income $6K
    • Aren’t these from individuals too?
  • Gain on sale of investments $83K
    • This is investment income. Why is it not included in that item?
  • Contribution from CMS Australia in relation to fundraising expenses $84K, including Note (a)
    • From Note (a), this the total fundraising expenses incurred by CMS-V.
    • It represents 4% of revenue.

Expenses

  • This classification of expenses mixes the two permissible methods.
  • Administration expense is not disclosed.
  • Fundraising expense is somewhat hidden: it is not in the expenses but under revenue in Note 2.
  • Finance costs are not disclosed.
  • Contribution to Church Missionary Society Australia Limited $1.15 m, including Note 4
    • This covered the payments made to CMS-V’s missionaries.
      • There are nine missionaries listed on the website, but ‘for security or privacy reason’, this is not all of them.
    • Why is it not included under ‘Employee benefits expenses’?
  • Employee benefits expenses $634K
    • Based on the number of employees declared in the AIS 2015, and assuming this doesn’t include missionaries, part-timers work 50% of full-time hours, and casual employees 10%, this is $48K per employee.
  • Summer conference and other events $131K
    • $141K revenue, see above, so a $10K surplus on those activities.
  • Utilities, repair and maintenance $15K
    • If utilities are included here, what accounts for the difference between ‘Office accommodation’ ($80K) and the rent in Note 3(a) ($44K)?
  • Mission support $10K
    • Is this CMS-V’s giving? It is less than ½% of revenue.

Other comprehensive income

  • This item should be classified as either an amount that will not be classified subsequently to profit or loss or one that will be so classified when specific conditions are met.

What’s left at the end of the year – the Statement of Financial Position (page 2 of the Financial Report)

  • Financial assets $3.37 m, including Note 7
    • Together with the cash held, this represents over 19 months of revenue. Why is so much held?
    • What is the asset mix for this portfolio?
  • Employee benefits $37K (current), $15K (non-current), including Note 11
    • Is there no provision for resettlement of missionaries?
  • Reserves $1.34 m
    • There is no breakup of this amount.

Essential information to go with the figures – the Notes to the Financial Statements (page 5 of the Financial Report)

  • 1 Summary of Significant Accounting Policies
    • (a) Basis of preparation
      • The directors don’t say why they think that CMS-V is not a reporting entity.
        • The implication is that they think that all those currently involved with CMS-V, plus all those who might become involved as a result of CMS-V’s promotions and website, can get a financial report tailored to their particular needs.
      • Missing:
        • the type of entity (individual, not-for-profit), functional and presentation currency,
        • date the accounts were authorised for issue.
        • which Accounting Standards they complied with.
    • (d) Property, Plant and Equipment
      • Missing:
        • the useful lives adopted
        • policies on the review of the depreciation factors and
        • the derecognition policy
    • (g) Employee Benefits
      • What are these benefits?
      • There is normally a distinction between short-term and long-term benefits.
      • Defined benefit superannuation contributions?
    • (k) Revenue and Other Income
      • With the donations missing from the financial statements, is this because CMS-V believe that they become their monies at the point of collection, e.g. within churches? If so, is this valid?
    • (l) Agency Arrangement
      • They might not be CMS-V revenue and expense, but presumably they are still put through the books?
    • (m) Goods and Services Tax (GST)
      • What about GST and commitments and contingencies?
    • Missing policy Notes:
      • New, revised or amending Accounting Standards and Interpretations adopted
      • Current and non-current classification
      • Impairment of non-financial assets
      • Fair value measurement
  • Notes normally included, even if the amounts are zero, but missing here:
    • Critical accounting estimates, judgements and assumptions
    • Contingent liabilities
    • Events after the reporting period

An independent opinion on the financial statements – the Independent Audit Report… (the third last page of the Financial Report)

  • This report is a ‘clean’ opinion. To take the right amount of comfort for this finding, please read here and here.
  • The auditor says that the financial report complies ‘with Australian Accounting Standards to the extent described in Note 1’. However, there’s no such description there.
  • He draws ‘attention to Note 1(k) about ‘the uncertainty associated with donation revenue’. However, that Note that doesn’t fully explain the issue.

Certificate of Members of Branch Council (the last page of the Financial Report)

  • Although the other statement by the Branch Council is signed (see above), this one isn’t.

Membership of accountability organisations claimed

(End of review)

 

 

  1. 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.’
  2. 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.
  3. I use the Pinnacle Financial Statements, respected in the profession as providing a very sound basis for producing compliant financial reports. To this I add an assessment of materiality (both quantitative and qualitative), where the users being considered are donors.