Transcript Accountability, Financial Reporting, Standards and Disclosure Presentation by: Dr Ted Flack Julie-Anne Mee State Manager Communications and Fundraising The Australian Centre of Philanthropy and St Vincent de Paul.

Accountability, Financial
Reporting, Standards and
Disclosure
Presentation by:
Dr Ted Flack
Julie-Anne Mee
State Manager Communications and Fundraising
The Australian Centre of Philanthropy and
St Vincent de Paul Society
Nonprofit Studies
School of Accountancy
Queensland University of Technology
Today?
Senate Economic Committee status
Standardisation and the Standard Chart of
Accounts
The role of the Annual Report
Senate Economic Committee
Enquiry on disclosure
Submissions
Process/position/results
Standardisation
Standardisation best described by its benefits
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Consistency
Comparability
Sectoral coordination
Communication and discussion
Better info for decision makers
Simpler reporting (by preparers)
Accountability
Robustness
Accounting Template
2002 – 2004: collation of data from Queensland
government agencies about grants.
2004 – 2006: collaborative development of a
Standard Chart of Accounts (SCOA) for Queensland
2nd – 3rd ¼ 2006: training and implementation of
SCOA in QLD government funders and nonprofit
recipient organisations
1st – 2nd ¼ 2007: collation of data from New South
Wales government agencies about grants and
collaborative development of SCOA (using QLD as
base platform)
3rd ¼ 2007: training and implementation of SCOA in
NSW funders and recipient organisations
Accounting Template
2006 - 2007: discussions with Federal agencies with
FaCSIA as lead agency.
2007: discussions with Western Australian human
services departments
2007: participation in the Victorian Review of Not-forProfit Regulation activities and report
Late 2007: initial discussions with Tasmanian, South
Australian and New Zealand human services
departments
Late 2007: updated Queensland SCOA using
learnings from New South Wales implementation
Advantages of a Standard
Chart of Accounts
Consistent and uniform reporting;
True financial performance can be ascertained;
Assists auditors in the annual audit;
Clear guidelines for account names;
Incoming treasurers and bookkeepers have a
framework; and
Enables benchmarking and developnment of KPI’s
Sample page in SCOA
EXPENSES 6-0000
MYOB
Account
Number
Suggested
Account
Names
6-0000
Expenses
Expenses are outflows or depletions of assets or
incurrences of liabilities that result in decreases in
equity other than those relating to equity. Expense
accounts may elect to record "in kind" transactions
and should have an equal and opposite Income
account for the value for a nil result. Generally small
to medium organisations will not recognise these
items in their accounts.
6-0010
Accounting
Fees
This account represents accounting and bookkeeping
fees. It excludes audit fees (which is its own separate
account). Includes GST, FBT and Financial Business
advice.
6-0020
Advertising &
Promotion
This account covers all advertising, marketing and
promotion fees paid by nonprofits in the course of
marketing, advertising and promotion of events and
services, etc. It also includes all printing relating to
promotional material.
6-0025
Agency
Temp Staff
This account includes the costs of temporary staff
employed for whatever reason from an agency. This
account excludes consultancy staff.
6-0030
Amortisation
Expense
Amortisation expense for the current year relating to
intangible assets.
Data Dictionary/Description of Account
IFRS Accounting
Standards
References
Framework
par 70(b)
AASB 138.118(d)
Other
Comments
Sample page in SCOA
6-0040
Assets
Purchased
<$5,000
The amount of $5,000 is arbitrary; the limit may be
set by the organisation. This account shows all
assets (including computers) purchased by the
nonprofit organisation that have an individual value
of less than $5,000 each. Any asset above $5,000 is
to be capitalised and shown as an asset in the
Balance Sheet. Some items that are expensed may
still need to be recorded in the Fixed Asset Register.
6-0050
Audit Fees
This account includes fees associated with an audit
of financial statements.
It excludes accounting or bookkeeping fees (these
are included in accounting fees above).
6-0060
Auspicing
Fees
This account represents fees paid by a non-profit
organisation to another organisation for providing
auspicing support. The auspicing organisation signs
agreements, carries financial risk and legal
responsibility for activities of the auspiced
organisation. It also includes internal auspicing fees.
These are true auspicing rather than recoupment of
administrative and project expenses.
6-0070
Bank
Charges
This account represents all charges associated with
the various bank accounts held by a nonprofit.
* It includes State Government Tax, account keeping
fees, EFTPOS fees, etc.
* It excludes credit card fees (which are recorded in a
separate account).
6-0080
Bad Debts
These are debts which have been written off due to
non-recovery.
AASB 101.AUS 126(a)
Next Phases
National approach
Funding acquittals align with standards
Accounting and auditing profession engage with
nonprofit sector
Appropriate financial literacy training for nonprofit
boards and staff rolls out
Research is supported about impact of nonprofit
financial performance (eg benchmarking and KPIs)
Financial Reporting Standards
In Australia – sector or transaction
neutrality - AASB
Part 2
Senate Inquiry into disclosure regimes
for charities and not-for-profit
organisations.
What is the underlying policy
objective of the Inquiry?
To provide interested parties with the
ability to obtain useable information
about the operations and finances of
nonprofit organisations
What information do
interested parties want?
Types of annual report disclosures nominated and valued by stakeholders in stratified sample of Australian public
fundraising charities (in descending order)
Representatives of Stakeholder Groups
Information preferences of
stakeholders in the stratified
sample (in descending order)
M
B
M
E
P
V
D
G
R
P
M
P
F
Total numbers of stakeholders
8
11
19
6
5
10
6
2
1
3
3
2
2
79
Financial statements
8
7
17
3
6
5
2
1
3
3
2
2
59
Board reports (inc. Office bearers'
reports)
8
7
19
6
1
7
5
53
8
9
3
1
7
4
32
1
4
20
5
19
Description of activities
Profile of board members
5
7
3
Progress against plans
2
6
6
Recognition of volunteers, donors and
pioneers
5
7
Human interest stories
4
2
Financial health trends (or treasurer's
commentary)
9
6
1
3
1
1
4
1
5
1
18
18
2
16
Stakeholder preferences
Although a large majority of stakeholders said they wanted to
be provided with financial statements, most also said they did
not use them or did not understand them. The research found
that the value of financial statement lies in their symbolic value
in that they signal that proper financial oversight is in place.
Stakeholders who have a personal interest in these
organisations tend to want to be provided with “soft”
information about the organisation. Preferred disclosures
include board reports, descriptions of activities, profiles of
board members and human interest stories about the
organisation.
How “useable” is the financial
information?
“Inside” stakeholders can command further
information - membership rights
–
–
–
–
Annual General Meetings
Elections of office bearers
Day-to-day involvement
Donor rights?
Outside stakeholders need standardised
information
– Audited financial statements
– Sector-specific accounting standards
– Standard chart of accounts
Size and “publicness” matter!
Small npos that are really only the
concern of the participants, should not
be over regulated.
Large npos, that rely on the support of
the general public, should be required to
be publicly accountable
One way to organise these ideas
Financial reporting
Class of
organisation
Regulatory approach
Regulation
Small private not-forprofits
a simple legal form suitable National model Associations
for regulation by the
Incorporation Act with minimum
participants
reporting requirements
Small public not-forprofits
Stakeholder regulation
Level 1 differential public reporting
requirements under existing forms of
incorporation with increased
‘subscribing member’ rights
Large private not-forprofits
Stakeholder regulation
Level 2 differential reporting under
existing forms of incorporation
Large public not-forprofits
Public accountability
Public disclosure of level 2 differential
reporting under existing forms of
incorporation
Non-financial reporting
Annual reports published on the web
– Regulate for minimum disclosures
• Objectives, achievements and plans
• Office bearers’ reports
– Encourage high quality (industry awards etc)
Thank You !!!
Any Questions ???