Archived: Africa Inland Mission International Australia Inc, charity review

This is a charity review, a review for those with an interest in the Australian charity Africa Inland Mission International Australia Inc (AIM).

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

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 5 May 2016, and invited them to comment. They sent this response for publication:

Thank you for your interest in the not-for-profit sector. Thank you for your comments following your self-initiated review of Africa Inland Mission International (Australia ) Inc. This organisation and our auditors will take your comments into account as we prepare our end of year reports. We will also consider comments in respect to our new website which is being developed, and other publications.  Thank you again for your interest in this sector.

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. This also applies to the information in the Financial Report.)
• There is then a more detailed comment on the Financial Report.
• Lastly, there is a section Membership of accountability organisations

Sources

• ACNC Register (including links)
• Google search on the charity’s name.
• AIM website.
• Not on any social media, or LinkedIn.
• State government fundraising licence registers.
• Reviews on Glassdoor – but most likely not about the Australian organisation.

REGISTRATION DETAILS

Entity Subtype

• This selection was due by 30 June 2015.
• ‘Advancing religion’ is one of the possibilities.
• The primary objective in the constitution is, generally, to represent the international organisation. Under that, the fifth specific objective is to spread the Gospel:
  • To propagate Christianity within and outside of Australia, especially among African peoples.

CHARITY DETAILS

Legal Name

• AIM is a NSW incorporated association (No. Y1658604).

Other Name(s)

• None of these are business names; AIM cannot therefore legally trade under any other name than its legal name.
  • It uses AIM Australia and Africa Inland Mission on its website, and AIM International Australia in its constitution.

Charity ABN

• Tax deductibility: No, you cannot claim a tax deduction for a donation to AIM.

Charity Street Address

• Postal address, from the website:  PO Box 328 Gosford, NSW 2250.

Phone

• From the website: (02) 4322 4777.

Website

• From the Google search: aimint.org/au.
• According to the site Which Christian Mission.com.au, also PrayAfrica.org.  But this is a site belonging to the international organisation.

ANNUAL REPORTING

• AIS 2015
  • This is AIM’s compulsory Annual Information Statement 2015 (AIS 2015).
  • It gives basic financial information. If you think that this might be sufficient for you
    • Quite apart from whether it is legal for AIM to choose cash accounting, as they say they did here, the Financial Report is not consistent with that choice.
    • Of the two types of financial statements possible, AIM has chosen, for undisclosed reasons, the type that requires a lower standard of disclosure.
    • From the Financial Report, the $29K Employee expenses/payments include the expense of a ‘Short Term Coordinator’ in addition to the CEO.
    • The absence of any expense for grants, either in Australia or overseas, although supported by the Financial Report, is not supported by their description, elsewhere in the AIS, of they did in 2015 (see Activities, below).
• Financial Report 2015
  • The Report was signed two months after the year end.
  • It was then lodged nearly four months after that.
  • The coverage of finances in this review is left until the financial report proper (see Latest financial report – detail, below). (Go straight there.)

ABOUT THE CHARITY

• Statement of Faith
  • Under Core Values on the website.
  • And the Doctrinal Statement in the constitution (see Charity’s Document (sic), below), is, with one change of order, identical.

 Date Established

• The story of AIM is part of this history of African Inland Mission.
• The story of the greater organisation – or at least to 1994 – is in this And also in this one, probably an even earlier publication.

Who the Charity Benefits

• Vision
• Mission
• Activities (What did AIM do?
  • In the AIS 2015:
    • AIM Australia sent people from Australia and New Zealand to undertake short-term and full-term (more than 2 years) ministry in Africa. These people are involved in sharing the good news about Jesus Christ with African peoples, and may be involved in education, medical and other activity. Funds were also sent to Africa for AIM-approved projects.
      • The lack of specifics means that we can’t tell whether this is particularly about 2015. In fact, there is no evidence that any funds were transferred in 2015.
• Some information specific to Australia can be found under the See ‘Explore’ section of the website.
• The magazine is produced by something called Asia-Pacific and Australia Council in AIM’s office.
• Outcomes (What did AIM deliver?)
  • Nothing systematic found.Some information specific to Australia can be found under the See ‘Explore’ section of the website.
• Impact (How were people’s lives improved?)
  • Nothing systematic found.
  • Some information specific to Australia can be found under the See ‘Explore’ section of the website.

Size of Charity

• AIM is $60K below the threshold for the next size up, ‘Medium’, the size that would require it to lodge reviewed or audited financial statements.

Financial Year End

• This means that the next financial report is due by 31 December 2016 – or 31 January if the ACNC is generous again. Before that the financial information on the Register will be up to 18 months out-of-date.
  • You may therefore need to ask for more up-to-date information.

WHERE THE CHARITY OPERATES

Operating State(s)[i]

• Given that it operates interstate, there is a strong argument that AIM, as a registrable Australian body, needs an ARBN. It doesn’t have one.
• AIM has ‘Give’ in its main menu.
• AIM also seeks bequests on this
  • It has a fundraising licence in only its home state; six other states have a licensing regime.
  • Apart from exemptions, whether it needs one depends on whether those states think that AIM, by calling for donations publicly, is ‘fundraising’ in their territory.

Operates in (Countries)

• Why include New Zealand and Hong Kong in a list of countries where AIM operates? What about the other seven Africa Inland Mission offices around the world?
• In what sense does AIM operate in the other ten countries (all African)?
• Although it is three African countries short of the list on the website, that list is for African Inland Mission
  • Both lists are missing the nine countries in the Northern Region. Why is this? If it is because of security concerns, it is surprising that all nine countries are similarly affected.

CHARITY’S DOCUMENT (SIC)

• An Annual Report/Review can be lodged on the ACNC Register, but AIM hasn’t done this.
• Nor is there one on the website.

RESPONSIBLE PERSONS

No. of Australian ‘responsible person’ positions[ii]

Peter Aldridge        This function was not working at the time of publication

Gavin Currie

Colin Earnshaw

John Harris

Leonard Lesleighter

Heather Love

• AIM is three short of the number of committee members required by its constitution.
• The directors are not shown on the website.
• Under ‘Position’
  • The constitution requires a Treasurer
  • What is the distinction between ‘Other’ and ‘Board Member’?

(End of review of the ACNC Register information)

Latest financial report – detail[iii]

• The directors’ belief that ‘a special purpose financial report’ is acceptable, a choice that allows them to make less than a full disclosure about AIM’s finances and operations, is implicitly a statement that any user is able to command the preparation of a financial report tailored to their needs. That’s all the people who they speak to all over Australia and all the people who get their magazine. Do the directors realise they are saying this?
• One of the four mandatory financial statements, the Statement of Changes in Equity, is missing.
• It is unclear what, if any, money is sent to Africa.
• The audit report, by Lawrence R Green of Shedden & Green Partners, is not produced according to current Australian Auditing Standards.

An independent opinion on the financial statements – the Independent Audit Report (between pages 2 and 3 of the Financial Report)

• This report is a ‘clean’ opinion (read here and here to draw the right conclusions from this).
• However, confidence in the opinion is reduced by
  • The use of statements and assertions that were replaced by the profession years ago.
  • The omission of the Statement of Cashflows from the scope of his audit.
  • His acceptance of the lack of the fourth statement, the Statement of Changes in Equity.

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

• Cash at Bank $96K and Cash on Deposit $674K, including Note 5
  • This should be ‘Cash and cash equivalents’.
  • Why, for a charity that received only $97K in donations and bequests, and had revenue of only $190K, and which has a mission of spreading the Gospel, is there a need to hold $770K in cash?
  • In Note 5, ‘Creditors and Borrowings’ is the same amount as ‘Accounts Payable’ in Note 3. Why are they separate to ‘Working Capital’? (Working capital includes accounts payable.)
• Other Amounts Receivable $11K
  • Cash is not a receivable.
• Investments $39K, including Note 2
  • Presumably these are ‘Available for sale’ assets as opposed to ‘Financial assets at fair value through profit or loss’?
• Fixed Assets $761K, including Note 12
  • This is a term that is long out-of-date. It should be ‘Property, plant & equipment’.
  • It appears that the vehicle that was held last year was sold. Was there no profit or loss?
  • Why does a small charity need two buildings?
  • ‘Improvements’ should be included in the cost.
• Payables $585K, including Note 3
  • Loans ($68K) are not payables.
  • Why is ‘Project – Balances owing’ $519K a liability’?
  • ‘Resettlement amounts set aside’ sounds more like a reserve than a liability. To whom is there a present obligation?
• Provisions, zero
  • Why, when there are employees, is there no liability for employee benefits?

 What was earned, what was consumed during the year – the Income Statement (page 4 of the Financial Report)

Revenue

• ‘Income’ should be ‘Revenue’.
• Donations $42K, Bequest $55K
  • This is 51% of revenue.
• Home Administration $62K
  • What is this? (It’s not a typical revenue item so needs explaining – especially as it is the largest item of revenue.)
  • This is 33% of revenue.

Expenses

• Note 10 says that there were no fundraising costs.
• Note 11 says that ‘AIM raises funds for projects and regularly remits those funds to the field.’ Why then are there no grants shown in the AIS 2015, nor in the expenses?
• Interest Paid $3K
  • There are no interest-bearing borrowings in the Balance Sheet. On what therefore was the interest paid?
• Other (Home Office costs) $38K
  • What’s included in this? (At 23% of expenses, it is far too large to be unexplained.)
• Property – House $9K, Property – Office $8K
  • What are these?
  • How do they relate to what is usually included in administration costs?
• Ministry – Travel $1K
  • It appears from the magazine that the Australian office also administers African Inland Mission in New Zealand and Hong Kong. Why then isn’t travel larger than $1K?
• Ministry – Other Costs $38K
  • What’s ‘ministry’? (The whole charity is a ministry.)
  • And within ‘ministry’, what’s included in this 23% of expenses?
• Short Term Coordinator / Payroll Expenses $29K
  • Since the funding for the coordinator was last year, presumably all but maybe the funding not paid last year ($2,449) is for employees.
    • How does the remaining $27K relate to (a) the $19K benefits paid to the CEO, disclosed in Note 1, the reporting of 22 employees in the AIS 2015, and the lack of any employee benefits provision?

The section below the expenses

• ‘Operating Surplus for the year’ is not a correct description. (No distinction is made between operating and non-operating.)
• The direction to Note 7 is missing. (But that Note adds nothing.)
• ‘Items that are now segregated from the Income Statement’ is not a correct description.
• ‘Total comprehensive income’ is missing.

Where the cash came from and where it went – the Statement of Cashflows (sic) (page 5 of the Financial Report)

• Donations is composed of both donations and the bequest in the income statement.
• The lack of mention of cash accounting in Note 1 entitles us to assume that accrual accounting is used. Why then do ‘Investment Income’ and ‘Home Administration and Other’ do not differ between this statement and the income statement?
• The last four items in under ‘Cashflows in Investing Activities’ are in the wrong section – they should be in the first one.
  • This explains why the ‘Reconciliation of Net cash used in operating surplus’ is missing some of the usual items.

Essential information to go with the figures – the Notes to and Forming Part of the Accounts (page 6 of the Financial Report)

• Note 1   Summary of Significant Accounting Policies
  • No explanation is given for the choice of the lower standard special purpose financial statements.
    • Is it really the case that all those currently involved with AIM, plus all those who might become involved as a result of AIM’s promotions and website, can get a financial report tailored to their particular needs? (This is the implication of not producing general purpose financial statements.)
  • The Acounting Standards that have been followed are not identified.
  • b) Donations and Grants
    • This Note is only part of the usual Note on revenue recognition.
    • AIM didn’t (and doesn’t normally?) receive any grants.
    • ‘Donations and Grants’ forms only 51% of revenue. What is the recognition policy for the $62K of ‘Home Administration’?
  • c) Furniture and Equipment
    • This is 1% of ‘Fixed assets’. What are the policies for the other assets, plus the other policies for property, plant & equipment that are customarily disclosed?
  • d) Employee Entitlements
  • Policy Notes normally included, but absent here:
    • New, revised or amending Accounting Standards and Interpretations adopted
    • Property, plant and equipment
    • Impairment of non-financial assets
    • Trade and other receivables
    • Trade and other payables
    • GST and other similar taxes
    • New Accounting Standards and Interpretations not yet mandatory or early adopted
  • Note 8   Segment Reporting
    • A Note that is not required and with content that doesn’t match the heading.
    • Note 11 is also not required.
  • Note 9 Related Parties
    • What about the Asia-Pacific and international organisations?
  • Notes normally included but absent here:
    • Contingent liabilities
    • Commitments
    • Events after the reporting period

Other pages

• Ignore the first part of the heading in the Statement of Financial Position as at 30 June 2015 / Statement by Management Committee (page 2 of the Financial Report) – it is a mistake.

Membership of accountability organisations claimed

• None claimed on the website.
• The Asia-Pacific and Australia Council, covering New Zealand and Hong Kong in addition to Australia, claims membership of Missions Interlink on page two of its magazine. However, membership is in the name of Africa Inland Mission International (presumably AIM).

(End of review)

[i] 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.’

[ii] 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.

[iii] I use the Pinnacle Financial Statements, respected in the profession as providing a very sound basis for producing compliant financial reports.  To this I add an assessment of materiality (both quantitative and qualitative), where the users being considered are donors.