Transcript Code of Conduct

Code of Conduct
Annual and Financial Reporting Webinar
April 16, 2013
Welcome
Have you dialled in for audio?
Dial 1800 332 147 enter code 2048 7127 and press #
Introduction of participants
• Please sign in your full name, position and organisation
Do you have a copy of the Code of Conduct and
Implementation Guidance handy?
(Code version: October 2010. Implementation Guidance: December 2012)
• Webinar format
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Twice a year
Questions - Written preferred. I will call for questions a few times.
Audio - Conversation and Presentation modes
Breaks??
April 16, 2013
Time/item
Session Content
Presenter/Facilitator
10:30-10:40
Welcome, Introductions and Purpose
Cathy Mayer
10:40-10:55
Overview – Code of Conduct Financial and Annual
Reporting requirements, including new requirements
10:55-11:30
Details - Financial Reporting requirements
1130-1135
Break ??
1135-1145
Other Financial Reporting Requirements and Financial
definitions
1145-1155
Annual Report Assessment Process (ARAP)
1155-1205
Useful Tips and Common Compliance Issues – avoid
pitfalls!
1205-1215
Finance Managers Working Group
1215-1225
Final Tips/More Questions?
1225-1230
Conclusion and Evaluation
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April 16, 2013
Purpose
• Overview - Code of Conduct Financial and Annual
reporting requirements, including new requirements
• How to prepare a Code compliant annual report
• Discuss tips and common compliance issues – avoid
pitfalls!
• Ask questions and have any concerns clarified
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April 16, 2013
Overview - Code of Conduct Financial and Annual
Reporting Requirements
• Code of Conduct Clause C.2 - Annual Reporting
• Principle window for transparency to stakeholders. Organisational
purpose, performance, activity and accountability to stakeholders.
• Reflective of the pursuits, issues and achievements for the period being
reported and be predictive on future directions and activity.
• C.2.1 - Transparency
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1. A written annual report, including:
2 a) Description of the Organisation’s purpose, objectives / aims and values;
2 b) A plain language summary of income and expenditure and overall financial health (NEW);
2 c) Description of the most significant aid and development activities undertaken during the reporting
period and their impact.
2 d) Information about evaluations into the effectiveness of and the learning from aid and development
activity conducted by the organisation (NEW);
3 a) A report by the management and/or governing body;
3 b) Financial statements prepared in accordance with the Code;
3 c) A statement of commitment to full adherence to the Code (NEW);
3 d) Identification of the ability to lodge a complaint against the organisation and a point of contact
(NEW);
3 e) Identification of the ability to lodge a complaint for breach of the Code with the ACFID Codeof
Conduct Committee and a point of contact (NEW).
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April 16, 2013
Overview - Code of Conduct Financial and Annual
Reporting requirements (Cont’d)
• Clause C.2.2 Financial Statements
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1. Annual Report will contain:
1 a) Financial Statements prepared in accordance with the Implementation Guidance and Financial
Definitions.
1 b) Reference to the availability of the full financial report
1 c) Audit report on the Code of Conduct Summary Financial Report or, if the full financial report has
been included in the annual report, on the full financial report.
Also refer Implementation Guidance.
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• Clause C.2.3 Access to Full Financial Reports
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Where Code of Conduct Summary Financial Report included in Annual Report, the Annual Report will
make it clear that the full financial report is available on request.
Same requirement in any other publications that refer to financial performance.
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April 16, 2013
Questions?
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April 16, 2013
Financial Reporting Requirements - Details
As per Clause C.2.2, Financial Reporting
Requirements set out in the Implementation Guide.
Options of Financial Reporting:
• 2 options on reporting, depending on revenue earned and legal structure;
• Use flowchart in Implementation Guidance to determine which financial
reporting option applies.
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April 16, 2013
Financial Reporting Requirements – Details
Did the signatory earn less
than $250,000 in
International Aid and
Development revenue for
the financial year?
Option 1 applies: Refer guidance.
YES
Required reports:
*Short Form Income Statement
Option 2 applies: Refer to guidance.
NO
Required reports:
* Income Statement
Is the signatory a company?
* Table of Cash Movements
*Audit report (see D.4.2)
YES
* Balance Sheet
* Statement of Changes in Equity * Table of Cash Movements
* Directors Declaration (optional whether inc in Annual report, but must be
submitted to ACFID)
*Audit report (see D.4.2)
NO
Option 2 applies: Refer to guidance.
Is the signatory an
incorporated association?
YES
NO
Is the signatory a trust?
NO
Required reports:
* Income Statement
* Balance Sheet
* Table of Cash Movements
* Management Committee
Declaration (optional whether inc
*Audit report (see D.4.2)
YES
in Annual report, but must be
submitted to ACFID)
* If the trustee is a company, refer to guidance for companies.
* If the trustee is an incorporated association, refer to guidance for
incorporated associations.
*If the Trustee is an individual or group of individuals refer to the
Code of Conduct Secretariat.
Required reports:
* Income Statement
Refer to Code of Conduct
Secretariat directly for
required reporting.
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November 7, 2012
*Balance Sheet
* Statement of Changes in Equity * Table of Cash Movements
(if company)
* Trustees Declaration (optional whether include in Annual report, but
must be submitted to ACFID)
*Audit report (see D.4.2)
Financial Reporting Requirements – Details
(Cont’d)
• Option 1 – For Organisations that have International
Aid and Development revenue less than $250,000
1. Short form Income Statement
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Larger organisations may choose to disclose as a note
Smaller organisations may choose this as primary income statement if it meets other statutory
requirements (you can add headings, just make sure all ACFID headings are included as a
minimum)
2. Table of Cash Movement
• Only required if cash raised for a designated purpose in any one financial reporting
period exceeds 10% of total international aid and development revenue.
• If the Table of Cash Movements is therefore not required, insert a note.
3. Audit Report
NOTE: Balance Sheet and Statement of Changes in Equity not required under this
Option
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April 16, 2013
Financial Reporting Requirements – Details
(Cont’d)
Option 1 - Short Form Income Statement
Revenue
20XX
• Donations and gifts
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Monetary
Non monetary
• Grants
• Other Income
Total Revenue
Expenditure
• International Programs
• Community Education
• Fundraising Costs
• Accountability and Administration
Total Expenses
Excess/(Shortfall) of Revenue over Expenditure
• Definitions – F2 of the Implementation Guidance.
• Even if zero balance, show zero or disclose in a note.
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20XX-1
Financial Reporting Requirements – Details
(Cont’d)
Option 2 – Income Statement (Page 1 of 2)
20XX
20XX-1
REVENUE
•Donations and gifts
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· Monetary
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· Non-monetary
• Bequests and Legacies
•Grants
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· AusAID
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· Other Australian
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· Other overseas
• Investment income
• Other income
• Revenue for International Political or Religious Adherence Promotion Programs
TOTAL REVENUE
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April 16, 2013
Financial Reporting Requirements – Details
(Cont’d)
Option 2 Income Statement (Page 2 of 2)
EXPENDITURE
International Aid and Development Programs Expenditure
•International programs
· Funds to international programs
· Program support costs
•Community education
•Fundraising costs
· Public
· Government, multilateral and private
• Accountability and Administration
• Non-Monetary Expenditure
Total International Aid and Development Programs Expenditure
• International Political or Religious Adherence Promotion Programs Expenditure
• Domestic Programs Expenditure
TOTAL EXPENDITURE
EXCESS / (SHORTFALL) OF REVENUE OVER EXPENDITURE
• Definitions - F.2 of the Implementation Guidance
• Even if zero balance, show zero or disclose in a note.
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November 7, 2012
Financial Reporting Requirements – Details
(Cont’d)
Option 2 – Balance Sheet (Page 1 of 2)
20XX
ASSETS
Current Assets
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Cash and cash equivalents
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Trade and other receivables
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Inventories
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Assets held for sale
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Other financial assets
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Total Current Assets
Non Current Assets
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Trade and other receivables
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Other financial assets
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Property, plant and equipment
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Investment property
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Intangibles
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Other non-current assets
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Total Non Current Assets
TOTAL ASSETS
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20XX-1
Financial Reporting Requirements – Details
(Cont’d)
Option 2 – Balance Sheet (Page 2 of 2)
20XX
LIABILITIES
Current Liabilities
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Trade and other payables
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Borrowings
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Current tax liabilities
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Other financial liabilities
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Provisions
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Other
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Total Current Liabilities
Non Current Liabilities
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Borrowings
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Other financial liabilities
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Provisions
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Other
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Total Non Current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
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Reserves
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Retained Earnings
TOTAL EQUITY
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April 16, 2013
20XX-1
Financial Reporting Requirements – Details
(Cont’d)
Option 2 – Statement of Changes in Equity
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Retained Earnings
Reserves
Other
Total
Balance at [Date] (commencing balance)
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Adjustments or changes in equity due to, for example,
adoptions of new accounting standards
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Items of other comprehensive income
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Excess of revenue over expenses
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Other amounts transferred (to) or from reserves
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Balance at XXXX (year end balance)
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November 7, 2012
Financial Reporting Requirements – Details
(Cont’d)
Option 2 – Table of Cash Movements
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Different to a Statement of Cash Flow
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Must agree to the Cash balance in the Balance Sheet (beginning and end of reporting period)
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Purpose to ensure accountability of Cash raised for designated purposes
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Only required if cash raised for a designated purpose in a reporting period exceeds 10% of total
international aid and development revenue
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If the Table of Cash Movements is not required, need to include statement or words to following
effect “No single appeal, grant or other form of fund raising for a designated
purpose generated 10% or more of the organisation’s international aid and
development revenue for the financial year”
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Financial Reporting Requirements – Details
(Cont’d)
Option 2 – Table of Cash Movements
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April 16, 2013
Financial Reporting Requirements – Details
(Cont’d)
Option 2 - Governing Body Declaration
EXAMPLE OF FORMAT
The [Governing Body] of [ Name of Association] declare that:
(a)the financial statements and notes as set out on pages [xx] to [xx], are in accordance with the
[relevant Incorporated Associations Act] and:
i. comply with relevant Australian Accounting Standards as applicable; and
ii. give a true and fair view of the financial position (or presents fairly the financial position
(if in South Australia)) as at [balance date] and of the performance for the year ended on that date of the association;
(b)in the [Governing Body’s] opinion there are reasonable grounds to believe that the association will
be able to pay its debts as and when they become due and payable.
This declaration is made in accordance with a resolution of the [Governing Body].
[Signature]
[Name]__________________
[Title - position on Governing Body]
[Signature]
[Name]________________________
[Title - position on Governing Body]
[Date]
[Place]
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Break
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April 16, 2013
Other Financial Reporting requirements
• Code of Conduct Clause C.3 Fundraising
• Clause C.3.6 Application of Donated Funds
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When fundraising for specific purposes, organisations will make a plan for use of any excess funding
raised. Make this known at the commencement of the fundraising appeal.
Maintain financial records that enable substantiation of application of donor funds and provide on
request.
• Clause C.3.7 Disclosure of Fundraising and Administration Costs
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Any use of expenditure ratios will truthfully and transparently disclose all costs incurred in the
donation program.
Should not give the impression that fundraising has no costs nor that aid and development programs
have no administrative component.
If using financial ratios, comply with the Implementation Guidance at C.2.1.
Also applies in publications and marketing material.
Any ratios used will be accompanied with a note explaining how these have been determined
April 16, 2013
Other Financial Reporting requirements
Code of Conduct Clause D.4 Financial management
• Clause D.4.1 Internal Financial Controls
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Maintain internal financial control procedures that minimise the risk of misuse of funds.
Maintain detailed accounting records.
Have policies and procedures in place to ensure appropriate segregation of duties, taking into
consideration size and capacity of the organisation.
Adequate procedures to review and monitor income and expenditure by management and the
governing body.
Policy for internal loans and transactions to staff and governing body members.
Nature and amount of any loans or payments to the governing body members or related parties be fully
disclosed in the annual financial report and subject to audit.
Funds and resources entrusted to an organisation must be controlled and properly invested and
managed prior to their disbursement.
April 16, 2013
Other Financial Reporting Requirements
Clause D.4.2 Auditing of Financial Statements
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1. Full financial reports and Code of Conduct Summary Financial Reports will be independently audited
in accordance with the relevant Australian Auditing Standards.
2. Auditor will be a qualified accountant who is a CPA, CA, NIA or registered Company auditor.
3. An audit report for either the Code of Conduct Summary Financial Report or the full financial report
must be signed by the auditor and include their identity, qualifications and contact details. For example,
the auditor often has “Partner” without the qualifications.
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You need to include an audit report within your Annual Report and it must relate to those financial
reports enclosed. For example, if you have a Code of Conduct Summary Report, the audit report must
be for that Summary Report.
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Please watch the page numbering (particularly if the Audit report mentions which pages have been
audited).
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November 7, 2012
Financial Definitions
Code of Conduct Clause F.2 Financial Definitions
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In Implementation Guidance only.
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Definitions to be used in preparation of Financial reports
• Financial Definition Example:
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Use of Non-monetary headings – expenses must offset revenue.
April 16, 2013
Questions?
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April 16, 2013
Annual Report Assessment Process (ARAP)
Code of Conduct Clause E.2 Assessment of
Compliance
• E.2.3 Annual Reporting
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Submit within 5 months of end of financial reporting period the following:
1) Annual Report – Code summary financial report format
2) Full Financial Statement (if not included in Annual Report)
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Hard copy or Website link emailed to [email protected]
We recommend you put a read receipt on your email
– just in case a document is caught up.
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Extension request may be lodged with Compliance Officer before due date
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April 16, 2013
Annual Report Assessment Process (ARAP)
(Cont’d)
• What to expect:
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Acknowledgement of receipt (mainly by email)
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Phone call regarding feedback
Letter confirming the conversation, with a matrix attached
(if there are areas of non-compliance and there’s action required, keys ‘X’,
‘Y’ and ‘Z’).
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We may require you to respond to the letter, depending on action
required.
- We use a Risk-based approach to assessments. All organisations will be
fully assessed at least once every 3 years. You will receive a letter even if
your organisation has not been assessed that year.
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Finally a certificate will be sent out. (once compliant with ARAP and CSA)
April 16, 2013
Annual Report Assessment Process (ARAP)
(Cont’d)
Example of Matrix Template (Page 1 of 2)
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April 16, 2013
Annual Report Assessment Process (ARAP)
(Cont’d)
Example of Matrix Template (Page 2 of 2)
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April 16, 2013
Useful Tips and Common Compliance Issues –
Avoid Pitfalls! (Slide 1 of 2)
Tips to producing a Code compliant Annual Report
1.
Refer last year’s Compliance letter and attached matrix to
ensure deficiencies are rectified.
2.
Financial Definitions (Part F) are applied. In particular, please ensure program expenditures,
community education, fundraising and administrative expenses have been captured and
reported according to the definition and not all lumped into administrative.
3.
Financial templates used - all reporting headings are used or noted.
4.
Submission within 5 months end of reporting period.
5.
Must publish Financial report within the Annual Report.
6.
Audit report is included in Annual Report, is signed with details of qualifications, identity and
contact details and relates specifically to the reports therein.
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April 16, 2013
Useful Tips and Common Compliance Issues –
Avoid Pitfalls (Slide 2 of 2)
7.
Table of Cash movements (TCM) for Designated Purposes is included or noted that one is not
required. Closing balance reconciles back to Cash/Cash equivalents on Balance Sheet.
8.
Your Annual report makes mention that the Financial statements are prepared in accordance
with the requirements of the Code. In addition to this, there is a statement of commitment to full
adherence to the Code.
9.
Your Annual report identifies the ability to lodge a complaint against the organisation and a point
of contact AND also identifies the ability to lodge a complaint for breach of the Code with the
ACFID Code of Conduct Committee and a point of contact.
10. Ratio or pie chart is accompanied by note explaining how they are determined (be careful that
all labels are present and your charts/graphs aren’t misleading)
11. Governing body declaration provided and signed (note that this does not need to be included in
the Annual Report)
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Financial Review Standing Committee and
Finance Managers Working Group
• The Financial Review Standing Committee is formed by the Code
Committee and meets throughout the year. This Committee:
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assists the Code Compliance officer (me!); and
takes recommendations from the Finance Managers Working Group to the Code Committee
on updating the Implementation Guidance each year.
• The Finance Managers Working Group is coordinated by members for
members:
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If your organisation is a member of ACFID then you can be accepted, and have access to,
Basecamp and invited to a face-to-face meeting (at least once a year);
It reviews regulatory and accounting standards changes and also looks at current topics of
interest to organisations in the NFP sector specifically around financial topics.
April 16, 2013
Final Tips
• Please contact us if you know you are going to be lodging your
reports late.
• Ensure that last years non compliance issues have been dealt with
(contact us if you need another copy of the Matrix)
• Repeated ‘Y’ issues will need to be rectified before your
organisation can be considered compliant with the Code.
• If your organisation is compliant and/or only received ‘Y’ issues, and
your organisation’s CSA is also compliant, a certificate will be sent
out confirming this.
• Contact Cathy Mayer on 6281 9234 (Mon-Thurs) or
[email protected] for any assistance relating this topic.
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Final Questions?
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April 16, 2013
Conclusion and Evaluation
• A feedback email will be sent to you after this course.
We would be happy for your suggestions/improvements
etc.
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April 16, 2013