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Australian Fellowship of Evangelical Students, charity review

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This is a charity review, a review, for supporters and potential supporters, of the Australian charity Australian Fellowship of Evangelical Students (AFES).

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 2 December 2015, and invited them to comment. Given that one of their ‘Non Negotiable’ strategies cited in the Directors Report 2014 (see below) is ‘Excellent Governance’, I expected a quick acknowledgement and an interest in what I had found. I got the former, from Dave Dorman, the National Administrator, but the interest was limited to the fact that they needed to complete their AIS 2014 and submit a Financial Report that included an audit report. (Both of which they did.)

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).
  • Websites for AFES, National Training Event (NTE), and their gospel presentation site, Uncover. And the associated social media sites for each – bottom right on the first site, and in the footer in the other two. Plus AFES on LinkedIn.
  • State government fundraising licence registers.
  • www.glassdoor.com

REGISTRATION DETAILS

Entity Subtype

  • A type consistent with sharing the Gospel.
  • As is the company’s prime object in its constitution:

AFES is an Interdenominational (sic) Christian organisation that has been established for the following objects:

  1. to promote the mission of Jesus Christ in Australian Universities (sic) by building evangelical student groups that:
  1. Evangelise students by proclaiming Jesus as Lord;
  2. Encourage growth toward Christian maturity;
  3. Train students in the skills and character to serve Jesus and His people; and
  4. Send graduates throughout Australia and the world to serve Christ…

CHARITY DETAILS

Legal Name

  • AFES is a public company, a company limited by guarantee.
  • It is permitted to omit ‘Ltd’ on the end of its name.

Other Name(s)

  • There are two names that AFES uses for its programs, Uncover and National Training Event (see Sources, above). Unless AFES owns this one, then both are unregistered. Whether or not they should be depends on whether they are ‘carrying on business’ under the name. And

Generally, if you are entitled to an ABN based upon the nature of your activities…you will be carrying on a business for the purposes of the Business Names Registration Act[ii].

Charity ABN

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

Charity Street Address

  • The postal address, from the website, is PO Box 684 Kingsford NSW 2032

ANNUAL REPORTING

  • AIS 2014
  • This is the compulsory Annual Information Statement 2014 (AIS 2014).
  • It gives basic financial information.
  • Financial Report 2014
  • This is actually more than a Financial Report, containing some information that would normally be in an annual report. (And that is what it is called.)
  • The Directors’ Declaration was signed only five weeks after year end.
  • But it wasn’t lodged with the ACNC until nearly three months after that.
  • 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
    • This is a copy of paragraph 2.2 of the constitution (see Charity’s Document (sic), below).

Date Established

  • Here’s a history of AFES, including where you can read more.

Who the Charity Benefits

  • Vision
    • “Proclaiming Jesus Christ at university to present everyone mature in Him.”
  • Mission
    • A duplicate of the constitution (see Entity Subtype, above).
  • Activities (What did AFES do?)
    • From the Description of charity’s activities and outcomes in the AIS 2014:
      • Teaching university students about the bible and training them to do this with other students.
    • If the Annual Campus Group report is still used, then AFES should have a good idea of what has happened during the year:
      • How many main meetings do you run per week?
      • Average number attending main meetings per week (total)
      • How many small groups do you run per week?
      • Average small group size
      • Average number attending small groups per week (total)
      • How many from your campus went to NTE [National Training Event] last year?
      • NTE Mission last December: Church attended/No. in team/What did you do on mission
      • Conferences/camps – give details of events your group ran/attended last year
  • Outcomes (What did AFES deliver?)
    • Unfortunately AFES did not respond to the request to describe its outcomes in the AIS 2014.
  • Impact (How were people’s lives improved?)
    • Nothing found.

Financial Year End

  • This means that the next financial report is due by 31 March 2016. Before that the financial information on the Register will be up to 18 months out-of-date.

Basic Religious Charity

  • This is incorrect – AFES doesn’t qualify.

WHERE THE CHARITY OPERATES

Operating State(s)[iii]

  • Although not described on the website, we know from here that there are ‘area and state support committees’.
  • From their statement in the Notes to the Financial Statements (see below) that the figures for ‘areas’ are included in the figures for AFES, it is reasonable to conclude that AFES raises funds in all States. However, it holds a fundraising licence in NSW only.

Size of Charity

  • With a revenue of $9.62 m, AFES easily qualifies in the largest of the ACNC three size categories (‘Large’).

CHARITY’S DOCUMENT (SIC)

  • Other than the financial report labelled ‘Annual Report’, there is no Annual Report/Review available on the ACNC Register.
  • Nor is there one on the website.

RESPONSIBLE PERSONS

No. of Australian charity ‘responsible person’ positions[iv]

Daniel Anderson                          2

Richard Chin                                 2

Hunt Jeffrey                                  2

Claire Jones                                   2

Michael Lin                                   2

Stephen Mason                            5 (but two are duplicates)

Alan Reader                                 2

Andrew Reid                                4

Susan Shiner                                3

Howard Spencer                          5

Craig Tucker                                 3

Cheng Vivian                                1

Scott Woodward                          2

Phillip Zamagias                          1

  • At 14 directors, this board has two more than the number fixed by the constitution (clause 12.1).
  • Clause 12.4 says that ‘A person is ineligible to be a Board Director if they are an employee of AFES’. Richard Chin is both.
  • There are six directors on this list that are not in the Directors’ Report, and four extra in that Report.
  • The constitution provides for
    • six directors nominated by the members in the states: one by NSW and ACT members together, one for QLD and NT together, and one by the members in each of the other four states; and
    • six to be ‘elected by the Members from nominations’ by the members [clause 12.2].
    • Neither the Register nor the website shows which directors are State representatives.
  • There is a description of ‘governance’ on the website, but this does not include a listing of the directors.
    • That section says that the second set of six directors ‘are nominated for their skill set in relevant theological, ministry and business management areas’. This does not agree with the qualifications specified in the constitution (clause 12.5).
  • No reason was found for the ‘Positions’ to vary between ‘Board Member’, ‘Director’, and ‘Other’.

(End of review of the ACNC Register information)

Latest financial report – detail

  • What is the relationship between the two trust funds in Note 14 and these accounts?

Directors’ Report 2014 (page 2 of the Financial Report)

  • No such report is required by the ACNC.
  • Errors:
    • ‘Financial Position’ (page 3): accumulated funds are $2.86 m, not $2.93 m.
    • There are 14 directors shown on the Register (see Responsible Persons, below), not twelve (‘Board Directors’, page 4).
  • Missing:
    • A list of the directors during the whole of the year and up to the date of the report.
    • Objectives, short-term and long-term.
    • The qualifications, experience, and special responsibilities are not given for each of the directors.
    • Identification of the Secretary.
  • Sections not required: ‘Indemnifying Directors or Officers’

Where the directors put their name to the Report – the Directors’ Declaration – page 9 of the Financial Report

  • The reference should be to the ACNC Act, not the Corporations Act.
  • The declaration about fundraising should be ‘in addition to the directors’ declaration’[v].

The Auditors (sic) Independence Declaration – page 9 of the Financial Report

  • The ACNC does not require this to be lodged.
  • The reference should be to the ACNC Act, not the Corporations Act.

What’s left at the end of the year – the Statement of Financial Position (Balance Sheet) – page 10 of the Financial Report

  • Cash $5.10 m (including Note 2)
    • This should be ‘Cash and cash equivalents’.
    • There is no explanation for why such a large amount is held, and particularly why there is $1.46 m at call.
  • ‘Receivables’ and ‘Prepayments’: the name of the Note doesn’t match the financial statement.
  • ‘Motor Vehicles’ should be included in Property, Plant and Equipment.
  • Payables $709K (including Note 7)Normally titled ‘Trade and other payables’.
    • Where are the trade creditors?
    • Net NTE future income $189K: There is no explanation of this item.
    • Other Payables $409K: This is too large an amount to be unidentified.
    • Deposit Fund $154K: The components are not all ‘payables’. Borrowings, for instance, should be separate.
  • Provisions, current, $646K (including Note 8)
    • An estimate should be made of the non-current portion. (Note 1 says that this is impossible, but the company’s peers are able to do it.)
    • The prior period amount should have been re-stated for the effect of the error disclosed in Note 1.
  • Designated Funds (including Notes 1(d) and 14) $590K
    • Note 1(d) conflicts with Note 14: Note 1 gives a range of reasons for the existence of this total, whereas Note 14 says they are trust monies.
    • Trust assets, if included in the AFES figures, should be shown separately in the balance sheet.

What was earned, what was consumed during the year – the Statement of Comprehensive Income (page 12 of the Financial Report)

  • The item ‘Other Comprehensive Income’ is missing.
  • The classification of expenses should be either by function or by nature, not a mixture.
  • The following expenses are not disclosed:
    • Fundraising
    • Administration
    • Cost of sales
    • Superannuation
    • Amortisation

Where the money came from

  • Donations $8.55 m: presumably this includes bequests.
  • Interest on financial assets not at fair value – from banks $104K
    • There are no ‘financial assets’ in the balance sheet.
  • Recovery of office costs $40K: recovery from whom? And why?
  • Income from Conferences and Events $834K
    • Although not included in the Note column, there is a Note – Note 9
  • Bookstall & CD Sales $1K: Why is there no inventory in the Balance Sheet? Or Cost of Sales in the Statement of Comprehensive Income?
  • Other revenue and projects $87K: Is there anything material in this relatively large amount?

Where the money went to (reordered by size)

  • Staffing Costs $7.79 m
    • ‘Employee expenses’ in the AIS 2014 is the total of this item plus the last two below. Why are payments to suppliers included in ‘Employee expenses’.
    • Assuming that the 90 part-time employees (AIS 2014) average half-time, ‘Employee expenses’ represents $57K per employee.
    • How does ‘Employee expenses’ relate to the term in the Accounting Standards, ‘Employee benefits’?
  • Expenses from Conferences and Events $864K
    • Deducting this from the similar revenue item above gives a loss. If the ‘expenses’ were only direct expenses then the true loss is even greater.
  • Other payments to suppliers and employees $456K
    • Why aren’t the ‘payments to…employees’ included under ‘staffing costs’?
  • Provision for Long Service Leave – funds paid to/(from) Deposit Fund $126K
    • The increase to a provision should not affect cash.

Where the cash came from and went to – the Statement of Cash Flows (page 13 of the Financial Report)

  • Funds used in investment activities’ include items that are not changes to investments.
  • The borrowing changes should be included under financing activities.

Essential information to go with the figures – the Notes to the Financial Statements – page 15 of the financial report

  • 1 Summary of Significant Accounting Policies
    • The ACNC Act should be mentioned.
    • Missing:
      • “The financial statements were authorised for issue on…”.
      • Functional and presentation currency
    • (a) Donated Labour, Materials and Equipment: how much is ‘significant’?
    • (b) Area Accounts
      • Nowhere is ‘areas’ explained.
    • (c)   Deposit Fund
      • Nowhere is ‘Deposit Fund’ explained.
    • (e)   Depreciation and Amortisation
      • The heading should be ‘Property, Plant and Equipment’.
      • ‘Intangibles’ should be a separate Note.
    • (g)   Financial Instruments
      • There are no financial instruments, as described here, in the balance sheet.
    • (j)     Staff Entitlements
      • Are these equivalent to ‘employee entitlements’ in the Accounting Standards?
      • Why is provision for long service leave made for all staff, but provision for annual leave only made for National Office staff?
    • Missing Notes in Note 1:
      • New, revised or amending Accounting Standards and Interpretations adopted
      • Revenue recognition
      • Current and non-current classification
      • Cash and cash equivalentsGoods and Services Tax (‘GST’) and other similar taxes
      • Fair value measurement
      • Trade and other receivables
      • Impairment of non-financial assets
      • Trade and other payables
  • Note 11   Related Parties
    • The directors are not the only possible related parties.
    • Benefits to the directors are not the only related party transactions possible. There can also be
      • Receivables and payables to related parties
      • Loans to and from related parties
  • Note 13   Financial Risk Management
    • Not required.
  • Notes 14 Trust and Designated Funds
    • Monash Houses $369K
      • There is no disclosure that this is a separate charity, Monash Evangelical Union House Trust.
      • There is no mention of the trust on the website.
      • Have the transactions and balances been included with those of AFES?
    • Leslie Griffiths Fund $220K
      • Why does this trust not even have an ABN?
      • There is no mention of the trust on the website.
      • Have the transactions and balances been included with those of AFES?
  • Missing Notes:
    • Contingent liabilities
    • Commitments
    • Events after the reporting period

Another statement of what was earned, what was consumed during the year – the Income Statement (page 22 of the Financial Report)

  • This statement is not required.
  • This statement is unaudited.

Membership of accountability organisations claimed

(End of review)

 

 

 

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

[ii] ASIC Regulatory Guide 235, www.asic.gov.au

[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.

[v] Charitable Fundraising Authority Conditions – 31 July 2015, Fair Trading, NSW Government, accessed 2 December 2015 from www.fairtrading.nsw.gov.au

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