Voice of The Martyrs Limited, 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The charity's Annual Information Statement current at the time of this review has since been superseded.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 Voice of The Martyrs Limited (VOM).

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 3 November 2015, and invited them to comment.  No response was received by the time of publication, on 15 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 that section:
    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).
  • VOM website. Social media at the top of each web page. Not officially on LinkedIn?
  • State government fundraising licence registers.
  • www.glassdoor.com.au

REGISTRATION DETAILS

Entity Subtype

  • The first of these is a type consistent with sharing the Gospel.
  • The company’s primary objects in its governing document (see Charity’s Document (sic)), flow from Hebrews 13:3: Remember those that are in bonds as bound with them.

CHARITY DETAILS

Legal Name

  • VOM is a public company, a company limited by guarantee.

Other Name(s)

  • The trading name ‘The Voice of The Martyrs should be here.
    • This registration allows the company to omit ‘Ltd’ on the end of its name.

Charity ABN

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

Charity Address for Service

  • I have no reasons to believe that this address is invalid.

Charity Street Address

  • Postal address, from the website: PO Box 250 LAWSON NSW 2783

Email

  • I have no reasons to believe that this address is invalid.
  • From the website, there’s a separate email for Youth: info@thirteenthree.org.au

Phone

  • Or, from the website, 02 4759 7000

ANNUAL REPORTING

  • AIS 2014
    • This is VOM’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’, but special purpose.
      • Because they are not shown in the audited statements, it is not possible to verify any of the line items in the Income Statement other than ‘Employee expenses’.
  • Financial Report 2014
    • The report was signed just under four months after the year end.
    • It was then lodged one month after that.
    • The coverage of finances in this review is left until the financial report proper (Latest financial report – in detail, below).

ABOUT THE CHARITY

Date Established

  • The VOM (Australia) ‘story’ on the website says 1969.
  • So does the broader VOM ‘history’.

Who the Charity Benefits

  • Vision
    • None found.
  • Mission
    • None found.
  • Activities (What did VOM do?
    • Description of charity’s activities and outcomes in the AIS 2014:

The principal activity during the financial year was to be the ‘voice in Australia’ for the Christian Martyrs in restricted nations. We were able to raise prayer and financial support for the Christian church that is under persecution in many countries where their Christian faith is challenged. We were able to identify and co-ordinate projects of encouragement in keeping with our constitution for the persecuted Church and assisted in equipping the Churches and bring aid to the families of those martyred for their faith.

  • Outcomes (What did VOM deliver?)
    • See Activities, above.
  • Impact (How were people’s lives improved?)
    • Nothing formal or systematic found.

Size of Charity

  • With a revenue of $2.37 m, VOM qualifies in the largest of the ACNC three size categories (‘Large’).

Financial Year End

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

WHERE THE CHARITY OPERATES

Operating State(s)[ii]

  • Although operating in all states, and calling for donations on its website, VOM doesn’t have a licence to fundraise in any of the seven states that have a licensing regime.  It is exempt in NSW.

Operates in (Countries)

  • Not to be confused with where VOM has ‘international offices’.
  • If you believe that what’s going on in the VOM headquarters is relevant to your decision in Australia, then you can read about the sad case of the former Executive Director, the treatment of the founder’s son when he spoke up, and a separate issue, the connection to Catholicism.

CHARITY’S DOCUMENT (SIC)

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

RESPONSIBLE PERSONS

No. of Australian charity directorships[iii]

Mervyn Knight                            2

Jeffrey Konemann                      1

Ronald McNair                           3

Robert Paino                               1

Mark Ulbricht                             2

John Wilson                               29

  • The website does not mention the board.
  • All six of these men are also on the board of Aid Distribution International Inc. (see Latest financial report – in detail, below).

 

(End of review of the ACNC Register information)

Latest financial report – detail

  • This company raised $2.37 m to support persecuted Christians overseas. However, nowhere are we told where the $1.66 m remaining after ‘employee benefits expense’, ‘depreciation expense’ and ‘changes in inventories’ went, how it got there, and on what it was spent.
  • From what is shown on the register of responsible persons, we can discover that $1.42 m went to another Australian charity, an association called Aid Distribution International Inc. However, all we can tell from their accounts is that $1.42 m went to ‘Payments to Beneficiaries’[iv].
    • There is no mention of Aid Distribution International Inc. in any of the VOM materials.
  • VOM has not explained why it presents a financial report that complies with a much lower standard of disclosure than one would have thought would be required – see Essential information…, below.

Directors’ Report (page 1 of the Financial Report)

  • The ACNC does not require this report.
  • The following sections, normally included, are missing:
    • Objectives, short-term and long-term
    • Strategy for achieving the objectives
    • Performance measures
    • Contributions on winding up
  • ‘Directors’ qualifications, experience and special responsibilities’ omits their qualifications.
  • The following sections, included by VOM, are not required:
    • Operating results
    • Dividends paid or recommended
    • Review of operations
    • Environment regulation
    • Value of assets
    • Significant changes in state of affairs
    • Auditor
    • Directors’ and auditors’ indemnification
    • Members’ funds
    • Directors’ benefits
    • Likely developments and expected result of operations

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

  • The ACNC does not require this report.

What was earned, what was consumed during the year – the Income Statement (page 6 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.

What was earned:

  • Revenues from ordinary activities $2.37 m (including Note 2)
    • This implies that revenue can also arise from extraordinary activities, a distinction that has long since gone from the Accounting Standards.
      • Besides, revenue is itself defined in the Standards as inflows that arise from ordinary activities.
  • Profit on sale of non-current asset
    • This is not revenue.
  • Bookshop Sales $31K
    • If ‘Cost of sales’ in Note 3 is the cost of the sales of the 152 items in the Shop, then Gross Profit was less than $1K.   And the shop made a net loss.
  • Interest received $52K
    • This should be ‘revenue’, not received. (See the Cash Flow Statement.)
  • Support and Donations (including Bequests) $2.28 m
    • This comprises 96% of revenue, yet there is no further information given.
      • We cannot therefore, for instance, see how much was raised for each of the nine (9) different funds to which one can give on the website.
  • Interest revenue from: other persons $52K
    • As opposed to?

What was consumed in the course of earning the revenue (see above)

  • This is, contrary to the Accounting Standards, a mixed classification of expenses.
  • The following expenses are not disclosed:
      • Fundraising
      • Administration
      • Superannuation
      • Finance costs
  • Changes in inventories of finished goods $30K (including Note 3)
    • The amount does not match the change that is shown in the balance sheet ($1K).
  • Employee benefits expense $670K
    • Assuming that the four part-time employees (AIS 2014) average half time, this expense represents average benefits of $74K p.a.
  • Other expenses from ordinary activities $1.66 m
    • Although this is 69% of expenses, there is no Note giving the breakup, or even the material items.
    • Presumably one of these material items is the amount sent overseas in fulfilment of the charity’s mission.

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

  • Cash $1.47 m
    • No explanation is given for holding this much cash.
    • As acknowledged in the Notes, this can include more than just cash.
    • The correct title is ‘Cash and cash equivalents’.
  • Receivables $40K (including Note 10)
    • Why is a deposit with ‘Progressive Mortgage Co. Ltd’ a short-term receivable?
    • The usual title is ‘Trade and other receivables’.
  • Inventories $52K
    • The change over last year does not agree with the amount shown in the Income Statement (above)
  • Property, plant and equipment $1.01 m (including Note 11)
    • How did buildings that are recorded at cost go down by $90K?
    • Note 1 says that buildings are shown at fair value, not cost.
    • No furniture and fittings, office equipment, or motor vehicle are shown.
    • There is no reconciliation of the movement in the accounts.
  • Provisions $221K (including Note 12)
    • Are there no non-current employee benefits?
    • “Retirement Fund’
      • There is nothing in Note 1 about this.
      • Why is it classified as current?
      • Why has the amount not increased this year?

Movements in the net wealth of the charity – the Statement of Changes in Equity (page 8 of the Financial Report)

  • No such statement, which is compulsory, has been included.

Where the cash came from and went to – the Statement of Cash Flows (page 9 of the Financial Report)

  • One of the two required reconciliations is missing.

Essential information to go with the figures – the Notes To The Financial Statements… (page 10 of the Financial Report)

  • Note 1: Statement of Significant Accounting Policies
    • The directors say the report ‘is a special purpose financial report’, but give no indication that this was a choice that they made. Any reasoning for this selection is therefore absent.
    • 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.
    • 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.

    • It is the ACNC Act to which they should refer, not the Corporations Act.
    • Contrary to what the directors say, the report does not comply with the Australian Accounting Standards.
    • Contrary to what the directors say, it is highly unlikely that an Australian not-for-profit is able to comply with the International Financial Reporting Standards.
  • Missing Notes
    • New, revised or amending Accounting Standards and Interpretations adopted
    • Current and non-current classification
    • Trade and other receivables
    • Impairment of non-financial assets
    • Trade and other payables
    • Fair value measurement
    • New Accounting Standards and Interpretations not yet mandatory or early adopted
    • Critical accounting judgements, estimates and assumptions
    • Events after the reporting period
  • Incomplete Notes
    • Inventories: not described.
    • Employee benefits: No description of what they are, including short-term versus long-term, defined contribution superannuation plans.
    • GST: how cash flows are treated has been omitted.
  • Note 4: Members’ Guarantee
    • Note that the company has only six members (members, not directors).
  • Note 5: Remuneration and Retirement Benefits $147K
    • Two VOM directors are paid directors’ fees.
      • This is unusual for a charity such as this.
      • It is also contrary to their constitution.
      • The reason for not paying the Executive Director (the CEO), either this year or last year, is not disclosed.

Where the board members put their name behind the report – the Directors’ Declaration (page 17 of the Financial Report)

  • The legislation cited should be the ACNC Act, not the Corporations Act.

An independent opinion on the financial statements – the Independent Audit Report (page 18 of the Financial Report)

  • The auditor says that he audited the ‘statement of changes in equity’, but there isn’t one in the Financial Report.
  • The legislation cited should be the ACNC Act, not the Corporations Act.
  • The auditor repeats, twice, the directors’ incorrect assertion of compliance with International Financial Reporting Standards.
  • The required Emphasis of Matter paragraph is missing.
  • 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] This is how the ACNC explains ‘operating locations’ in their application guide: ‘You need to give details about where in Australia your organisation conducts (or plans to conduct) its activities.’

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

[iv] Despite its turnover, well above the limit for registration, this charity is not registered for GST.

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