Church Missionary Society – Tasmania Inc, charity review

The charity's Annual Information Statement current at the time of this review has since been superseded.  Please start with the updated review published in December 2017, and come back to this one as needed.

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.

If you have found a spelling error, please, notify us by selecting that text and pressing Ctrl+Enter.