Katoomba Christian Convention Ltd, charity review

The charity's Annual Information Statement current at the time of this review has since been superseded.  Please contact me if you are facing a significant decision with this charity and an updated review would be of help.

This is a charity review, a review, for supporters and potential supporters, of the Australian charity Katoomba Christian Convention Ltd (KCC).

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

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

Ministry response

Prior to publishing this review, I sent my observations to the charity, on 4 November 2015, and invited them to comment. No response was received by the time of publication, on 27 November 2015.

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).
  • KCC website, the one for its business name, and separate ones for its six conventions: NextGen, BASECAMP, KEC KYCK, ENGAGE, and OneLove, all available from the top of the Home page.
  • Social media sites are not shown on the website, but KCC is on Facebook. Plus LinkedIn.
  • State government fundraising licence registers.
  • www.glassdoor.com

REGISTRATION DETAILS

Entity Subtype

  • A type consistent with sharing the Gospel.
  • The first object in the company’s Memorandum of Association[ii]– see Charity’s Document (sic), below – is

To take all such means as thought desirable for promulgating and spreading the gospel of the Lord Jesus Christ…’

  • KCC also uses its site to run camps for schoolchildren. However, even though they involve character development, these camps are not based on Biblical values, let alone used as vehicles for sharing the Gospel. They therefore do not readily fit with KCC’s mission or its charity subtype (above).

CHARITY DETAILS

Other Name(s)

  • Their other business name, BLUE MOUNTAINS ED, is missing.

Charity ABN

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

Charity Address for Service

  • Although I did not get a response to my invitation sent to this address, I know that it was a current address in mid-October.

Charity Street Address

  • The postal address, from the website, is PO Box 156 Burwood NSW 1805.

Phone

  • Blank.   From the website, 1300 737 140.

Website

E-mail

  • Although I did not get a response to my invitation sent to this address, I know that it was a current address in mid-October.

ANNUAL REPORTING

  • AIS 2014
    • This is KCC’s compulsory Annual Information Statement 2014 (AIS 2014).
    • It gives basic financial information.
      • If you think that this is sufficient for you then you should note that
        • The financial statements are not general purpose financial statements as stated here, but special purpose statements.
        • ‘Other Income’, is not Other Income but interest.
        • Because they are not shown in the audited statements, it is not possible to verify ‘Employee expenses’, ‘Grant…for use in Australia’, and ‘Grant…for use outside Australia’.
  • Financial Report 2014
    • Because both the Directors’ Report and the Directors’ Declaration are undated, we don’t know when the accounts were approved. Presumably it was some date prior to when the auditor signed on 10 April 2015. In this case the accounts were completed up to three months+ after the year end.
    • How was the report lodged with the ACNC 7 days before the auditor signed?
    • The coverage of finances in this review is left until the financial report proper (Latest financial report – detail, below).

ABOUT THE CHARITY

  • Statement of Faith
    • There isn’t one on the website.
    • There is a statement of doctrines in the Memorandum of Association (see Entity Subtype, above).
      • Less common for this day and age is the provision in the Memorandum that an applicant for membership must subscribe to this statement of doctrines.
        • Even more uncommon now is that ‘any member ceasing to hold all the said doctrine or neglecting, failing or refusing to sign at any time or from time to time on the request of the Council an acknowledgement in writing that he subscribe to the said doctrines shall ipso facto [by that very fact or act] cease to be a member.’

Who the Charity Benefits

  • Vision
    • None found. (There is no search function to confirm.)
  • Mission
    • None found.
  • Activities (What did KCC do?
    • From Description of charity’s activities and outcomes in the AIS 2014:

Organising 8 Christian conventions during the year and provide (sic) hospitality and accommodation facilities in Katoomba for schools and other groups. In 2014 we donated $73,611 to other mission organisations.

        • This donation is not quite as generous as is implied here: the entire amount was received as ‘Specific Purpose Donations – Third Parties’, so all they were doing was handing on what they were obliged to hand on.
  • Outcomes (What did KCC deliver?)
    • Unfortunately in the AIS 2014, in response to the request to describe activities and outcomes, there are only activities (see above).
  • Impact (How were people’s lives improved?)
    • Nothing found

Financial Year End

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

WHERE THE CHARITY OPERATES

Operating State(s)[iii]

  • Although there is no invitation to donate on the website, KCC did receive $446K in donations. However, it doesn’t have a licence to fundraise in its operating state.

Size of Charity

  • With a revenue of $4.1 m, KCC easily qualifies in the largest of the ACNC three size categories (‘Large’).

CHARITY’S DOCUMENT (SIC)

  • There is no Annual Report/Review available on the ACNC Register.
  • Neither is one available on the KCC website.

RESPONSIBLE PERSONS

No. of Australian charity directorships[iv]

Vikki Napier                                       1

Peter Moore                                       20

Steve Williams                                   2

Michael Lin                                         2

Archie Poulos                                     3

David Luxford                                    1

Jonathan Dykes                                  2

Bruce Bailey                                        1

Anthony Petterson                             1

Phil Wheeler                                       1

  • ‘Position’
    • The Directors’ Report shows that KCC has a Secretary, Treasurer, two Vice Chairmen, and a Chairman. All but the Chairman are missing under ‘Position’ on the Register. (The governing document provides for only one Vice Chairman, so maybe the Report is in error.)
  • The website doesn’t list the board members.

(End of review of the ACNC Register information)

Latest financial report – detail

  • KCC has not explained why it has chosen to present a ‘special purpose financial report’ rather than general purpose financial statements. See Essential information…, below.

What was earned, what was consumed during the year – the Income Statement (2nd page of the Financial Report)

  • This statement uses a format that has been out-of-date for a while now.
    • An ‘Other comprehensive income’ section is needed. 
  • There are no Notes.
  • Income $4.1 m
    • The sale of goods from the shop are neither shown nor is obvious in which line item they are included
  • Annual Conventions $1.34 m
  • Special Events $1.04 m
  • Accommodation $1.21 m
    • These three revenue items match, in name, three expenses items. See below for the net result.
  • Expenses $3.8 m
    • There are no Notes.
    • The classification of expenses is a mixture of the two permitted by the Accounting Standards.
    • The following expenses are not disclosed:
      • fundraising expenses
      • superannuation expense
      • administration expenses
      • cost of sales
      • employee benefits
      • depreciation
  • Annual Conventions $833K
  • Special Events $963K
  • Accommodation $1.09 m
    • These three expenses match, in name, three revenue items. However, because of the inclusion of a fourth expense, ‘Office Overhead’ ($855K), and the lack of Notes explaining the calculation of these four expenses, we cannot safely draw any conclusions about the profitability of these different areas of KCC activity.

 Movements in the net wealth of the charity – the Statement of Change (sic) in Equity – 2nd page of the Financial Report

  • There is no explanation for the $200K ‘Funds expended from reserve’.

What’s left at the end of the year – the Balance Sheet (3rd page of the Financial Report

  • Current Assets
    • This classification is not consistent with the Accounting Standards.
    • Where’s the stock of items sold on the internet?
  • Cash at bank $1.2 m
    • As acknowledged in the policy Note, this is more than just bank accounts. The correct title is ‘Cash and cash equivalents’.
    • There is no breakup given, so we can’t assess the reasonableness of the figure.
  • Debtors $62K
    • What is sold on credit?
    • Why such a large increase on last year?
    • Is any of doubtful collectability?
  • Prepayments $110K
    • Why such a large decrease over last year?
  • Non Current Assets $8.2 m
    • This classification is not consistent with the Accounting Standards.
    • There is no table in the Notes showing the changes to these assets.
  • Freehold property $7.0m (including Note 3)
    • This is more properly called ‘land’.
    • If the land has been revalued, where is the Asset Revaluation Reserve?
  • 169 Cliff Drive $599K
    • Why is this land valued differently from the other land?
  • Property Development – at cost $1.2 m
    • There is no explanation of this item.
    • If land has been developed, why is the development included under land?
    • Why, if this is the cost of the development, has the figure declined from last year?
  • Convention buildings $780K
    • The significant increase over last year is not explained.
  • Current Liabilities
    • This classification is not consistent with the Accounting Standards.
  • Housing Loan $372K
    • For whose house is this?
    • Why has the balance increased
  • Provision for Training $6K (unchanged from last year)
    • How is this legitimately a provision? To whom is it owed?
  • Next Gen International Fund $2K ($11K last year)
  • KYCK Subsidy $15K
    • Why are these two liabilities? To whom are they owed?
    • If they are owed why are they not included in Accounts Payable or Sundry Creditors?
  • Retained Equity $8.6 m
    • The Note number given here doesn’t exist.
    • There is no breakup of this item.
      • As the land has been revalued, presumably one of the components is an Asset Revaluation Reserve?

Where the cash came from and went to – the Cash Flow statement (4th page of the Financial Report)

  • Donations should be separate.
  • Loan increase/(decrease) $2K
    • Why is this included under ‘operating activities’?
  • There is neither a reconciliation to the surplus, nor a reconciliation to the balance sheet.

Essential information to go with the figures – the Notes to the Financial Statements – 5th page of the financial report

Note 1: Statement of Significant Accounting Policies

  • The directors say the company is a ‘not a reporting entity’, but they don’t say why.
    • They are in effect saying that anybody who is interested in this company has the power to contact the company and request a report tailored to their particular needs.
    • The result of the decision is that the accounts don’t comply with the Australian Accounting Standards, and can disclose considerably less than that required for a general purpose report, a report designed for those people who are dependent on the charity’s report for the information they need.
      • An important disclosure that is omitted, most likely because of this decision, is about related parties. For instance, there is no disclosure of the fact that one of the directors, Steve Williams, owns the business that has a large contract to supply AV and technical services to the KCC conferences.
    • You can compare the directors’ decision to this advice from the ACNC:

If people use and rely on your charity’s financial statements to help them make decisions (for example, about how to spend money) then your charity is most likely a reporting entity.

Although not clear from this, the directors should also consider prospective users.

  • The directors say that the report ‘has been prepared in accordance with Accounting Standards…unless Australian Accounting Standards set out accounting policies that the AASB has concluded would result in a financial reporting containing relevant and reliable information…’. This doesn’t make sense.
    • The report does not comply with all the Standards.
    • If the directors are saying that they comply with a subset of the Standards, they need to specify that subset.
  • The governing legislation is the ACNC Act, not the Corporations Act.
  • Missing Notes:
    • New and revised standards…
    • Current versus non-current classification
    • Trade and other receivables
    • Trade and other payables
    • Fair value measurement
    • Contingent liabilities
    • Commitments
  • Incomplete Notes:
    • Revenue: an explanation of ‘internal’ versus ‘third party’ donations and Fees in Advance is missing.
    • Critical accounting judgments and estimates
      • Estimation of useful life?
      • Employee benefits?
    • Non-current assets: a reconciliation

Directors’ Report (12th page of the Financial Report)

  • This report is not required by the ACNC.
  • The contents of this report are not in accord with industry expectations (for instance, this guide).
    • Missing are the qualifications, experience, and offices of the directors, the company’s objectives (split between short-term and long-term), the strategy for achieving those objectives, and the performance measures used by KCC.
  • The report is undated.

Where the board members put their name behind the report – the Directors’ Declaration – 14th page of the Financial Report

  • The directors state that the financial statements comply with the Accounting Standards. They don’t.
  • The Statement is undated.
  • The reference should be to the ACNC Act, not the Corporations Act.

An independent opinion on the financial statements – the Independent Auditor’s Report (the 2nd last page of the Financial Report)

  • He has omitted two of the four financial statements from his coverage.
  • The requirements come from the ACNC Act, not the Corporations Act.
  • He omits any reference to the fact that he has audited a special purpose report until the incidental reference in the final paragraph.
  • This is a ‘clean’ opinion.  Read here and here to draw the right conclusions from this.

Membership of accountability organisations claimed

  • None claimed.

(End of review)

 

 

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

[ii] One of two documents that were long ago replaced by a constitution in corporations law.

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

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

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