Archived: Australian Churches of Christ Global Mission Partners, charity review

This is a review, for donors, of the Australian charity Australian Churches of Christ Global Mission Partners Incorporated (GMP).

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, on 2 August 2015, to the charity and invited them to suggest corrections, and submit comments for publication. I received a letter from John Gilmore, Executive Director, on 19 August. This was divided into three parts: in the first he suggested that I reread their Annual Report, financial statements, constitution, and the ACFID[ii] Code of Conduct; in the second, he said that the format of their statements ‘more than met’ ACNC requirements; and in the third, he rebutted some of my observations. These rebuttals have been included at the appropriate point in the review.

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 Other Name(s)) below).
• GMP website, and social media via this page. Plus LinkedIn.
• State government fundraising licence registers.
• Email response, on 19 August 2015, from John Gilmore, Executive Director
• www.glassdoor.com

REGISTRATION DETAILS

• An entity subtype consistent with sharing the Gospel.

CHARITY DETAILS

Other Name(s)

• From the website and their Facebook and LinkedIn pages, GMP appears to be trading under the name ‘Global Mission Partners’. However, this name is not registered to them, and it is not clear why they would be exempt from the law requiring a business name to be registered.
  • Besides, there is another charity with the name ‘Global Mission’.
• With the law that requires them to use their full name on any “document given, published, drawn or issued by the association”, perhaps this doesn’t apply to internet sites.
  • GMP comment: “All our formal documents and reports do include our full name.”
• They also have a separate internet presence with their youth ministry, Embody: website, and Facebook.
  • This name is also not registered to GMP. (There is a SA private company Embody Pty Ltd.)
• The Financial Report (see below), presents consolidated financial statements, combining GMP with three other entities: Churches of Christ Overseas Aid (COCOA), Indigenous Ministries Australia (IMA), and International Church Partnerships (ICP).
  • However, none of these ‘entities’ are a charity, or an organisation or business name. They don’t even have an ABN of their own.
  • There is, however, a charity called Australian Churches of Christ Indigenous Ministries Inc.; its registration was ‘Voluntarily revoked’ on 18 March 2014.
    • No financial statements for its last period are offered on the ACNC Register or on the GMP website.
    • There is also another charity with a similar name, Australian Indigenous Ministries Inc., seemingly with nothing to do with GMP.
    • ‘IMA’ is already taken by a Western Australian private company, IMA Pty Ltd.
• The fact that at least COCOA and IMA are managed by GMP, not separately, is clear from this page.
  • This means that these three entities are divisions of GMP, not legally separate operations that need to be consolidated.

Charity ABN

• Tax deductibility: You can claim a tax deduction only if you donate specifically to the fund that GMP runs, Churches of Christ Overseas Aid[iii].

Charity Street Address

• The postal address, from the website: PO Box 341 TORRENSVILLE PLAZA  SA  5031

Email

• From the ‘Contact’ section of the website, it appears they are quite happy for you to contact, as you think necessary, both the Executive Director, John Gilmore, at jgilmore@gmp.org.au, and the Board Chair, Rod Cousins, at baywest@bigpond.com.

Phone

• There’s also a FreeCall number: 1800 467 222

ANNUAL REPORTING

• AIS 2014
  • This is the compulsory Annual Information Statement 2014 (AIS 2014).
  • It has some basic financial information. If this information is sufficient for you then you should note that ‘Employee expenses’ cannot be confirmed from the Financial Report because they are not shown there.
    • GMP comment: “Employee expenses are reported in the notes.”
      • Reviewer response: The ‘consolidated’ total for ‘Accountability and administration’, an item that includes more than employee expenses’, totals less than the figure in the AIS 2014 for ‘Employee expenses’.
• Financial Report 2014:
  • This report can also be opened from within the AIS 2014, above.
  • The Financial Report wasn’t completed until nearly three months after the year end. It was lodged two days later. (This was well before the final day for lodgement.)[iv]
  • The coverage of finances in this review is left until the financial report proper (below).

CHARITY’S DOCUMENTS

• There is no Annual Report/Review available on the ACNC Register.

ABOUT THE CHARITY

Who the Charity Benefits

• Vision
  • None found
• Mission
• Activities (What does GMP do?)
  • In the AIS 2014 GMP says simply “Received funds from supporters and distributed them to approved projects.”
  • This page gives a bit more on the big picture of what they do.
  • For what they did last year you can download the Annual Report here.
  • And to keep up-to-date on activities, every web page has ‘Latest News’ on the left hand side.
• Outcomes (What was delivered?)
  • Unfortunately in the AIS 2014, in response to the request to describe activities and outcomes, there’s only a one line summary of activities (see above).
  • You will find outcomes/impacts sprinkled through both the ‘Latest News’ (see above) and the Annual Report (see above).
• Impacts (How were people’s lives improved?
  • Other than those via the last point above, none found.

Size of Charity

• With revenue of $2.8 m, GMP comfortably exceeds the qualification for the ACNC’s top size of charity ($1 m).

Financial Year End

• This means that the next financial report is due by 31 December 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)[v]
  • There is no obvious reason why the Northern Territory is not included.
  • GMP holds fundraising licences in six of the seven states that have a licensing regime.
    • Apart from the request for donations from all Australia on the website, there are two GMP contacts in Queensland, so there is no obvious reason for not holding a licence there too.

RESPONSIBLE PERSONS

• The Constitution requires the following Office-Bearers: Chairperson, Deputy-Chairperson, and Treasurer. The ACNC record does not reflect this.
• To see all a director’s positions on Australian charities, search here.

Australian charity governing body memberships

Roger BAWDEN                                            2[vi]

Diana CATTS                                                  1

John GILMORE                                            2

Dean PHELAN                                              8 (see footnote v.)

Julie TRINNICK                                           1

Mark STEVENS                                            5

Sean KUM                                                     2

Rodney COUSINS                                        3

Gordon BUXTON                                        3 (one is duplicated)

(End of review of the ACNC Register information)

Latest financial report – detail

Contents (page 0 of the Financial Report)

• You might wonder why there are so many more statements and documents listed here than usual. The reason is that GMP have included six extra statements: the three Statements of Profit or Loss and the three Statements of Financial Position.
• This is because they have chosen to produce, for all but one of the types of statements, ‘consolidated statements’. Consolidated statements, however, are only applicable when an organisation controls another entity[vii], and, as discussed above under Other Name(s), the three funds that they have consolidated are not separate legal entities, just part of GMP.
• There is no explanation why the fourth statement is not also a consolidated picture.
• Be aware that the extra statements have not been audited.
• Note also that the usual Statement of Cash Flows (an essential part of a financial report), has been replaced with a Table of Cash Movements for Designated Persons (sic – it should be ‘Purposes’).
  • GMP comments: 1. “The publication of accounts is approved by the Auditor and the Board and in a format consistent with ACFID requirements and one that the ACNC accepts as valid.” 2. “When you read the consolidated statement, the details are in the three fund statements and related notes.”
    • Reviewer response: The presentation is confusing, atypical, there is no evidence for ACNC acceptance, and the extra six statements are unaudited.

An independent opinion on the financial statements: Independent Auditor’s Report (page 27 of the Financial Report)

‘Basis for Qualified Opinion’ (4^th heading)

• This is not a ‘clean’ audit opinion. It is a qualified opinion. The last paragraph on the first page gives the reason:

it is not practicable for (GMP) to maintain an effective system of internal control over donations and other income raising activities until their initial entry in the accounting records. 

• In other words they have no system to tell them that the money that they raise from donors makes it into their bank account. That’s 90% of their revenue.
• The auditor says that this is ‘common for organisations of this type’. The reality is that the only ‘type’ for which it is common is the organisation that has either misspecified revenue or not gone to the trouble of implementing the internal controls that are available, and that has an auditor that thinks that this deficiency acceptable.
• See here for a fuller explanation of this type of qualification.
  • GMP comment: “The Audit qualification is a common current requirement of Auditors for organizations such as ours.”
    • Reviewer response: Even if it were common, and that’s an empirical question, that doesn’t make it right.

‘Report on the Financial Report’ (1^st heading)

• The auditor has assessed, and agreed with, the directors’ decision that GMP is not a ‘reporting entity’. That means that they think that it doesn’t have any users (either existing or prospective) who are dependent on a general purpose report (that is, a report prepared for those who are not in a position to require GMP to produce a report tailored to their needs).
• The auditor has agreed with the decision to produce consolidated statements, and the decision to omit a Statement of Cash Flows.
• The auditor does not include the six extra statements in the list of what he has audited.
• The auditor incorrectly says that there are ‘officers’ assertion statements’ for both ‘the entity’ (which entity?) and the consolidated entity’.

Report by the Board (page 1 of the Financial Report)

• It is not clear how the directors decided what to include in this report. It includes less information than is usual for a large professional organisation.

What was earned, what was consumed during the year – the Consolidated Statement of Profit or Loss (page 3 of the Financial Report)

• This is not the correct format for this statement.
• The statement does not contain the correct contents.
  • There is no Other Comprehensive Income section
• Donations and gifts (totalling $2.5 m)
  • There is no Note for the two major items.
  • We are not told the split between deductible and non-deductible is not shown.
  • There is no match to the three funds shown under About us on the website.
  • There is a low correspondence between the line items here and the multitude of giving options on the website.
• Expenses $2.9 m
  • A functional classification is used, yet there is no disclosure of employee benefits expense, depreciation expense and superannuation expense.
    • GMP comment: “Employee expenses are reported in the notes.”
      • Reviewer response: There is no Note in the audited statement, and the other Notes do not allow the calculation of ‘Employee expenses’.
  • There is no Note for the two major items.
• Program support costs $114K
  • Does the inclusion of this item mean the figures for the three programs include only direct costs?
  • What is the relationship between this overhead and ‘Accountability and administration’?
• Community education $136K
  • There is no Note explaining this item.
  • Which communities? Here or overseas?
  • Why is this separate to the programs?
• Fundraising – Public $172K
  • No definition of ‘fundraising’ is given.
  • What does the addition of ‘Public’ mean?
    • GMP comment: “We use the ACFID Code of Conduct definitions for Community Education, Fundraising – Public, Program support, and Accountability and administration.”
      • Reviewer response: This is of no use to the reader of the accounts.
• Add: amount transferred from ACCIM $2.7 m
  • There is no Note explaining this very large item of income.
  • It is not clear from this statement what type of income GMP think this is.
• Less: net amount transferred to/(from) reserves ($2.8 m)
  • Transfers to reserves should not be shown in this statement.
• Surplus for the year ($67K)
  • This surplus is not calculated correctly.
• Funds available
  • This section should not be shown in this statement

What’s left at the end of the year – the Consolidated Statement of Financial Position (page 7 of the Financial Report)

• Cash and cash equivalents $1.7 m (including Note 2)
  • There is no explanation for holding this large a balance.
• Other financial assets $4.8 m (including Note 5)
  • The AASB 139 category is not specified[viii].
  • There is no explanation for having such so much donor money invested.
  • Nor for having invested 100% in shares, a relatively risky asset class.
    • GMP comment: “Funds are invested to generate income, and in an ethical, conservative, balanced and well managed portfolio, of some shares and managed funds.”
      • Reviewer response: (1) Were donors told that part or all of their donation would be used to establish a fund to generate income? (2) There are no managed funds according to Note 5, only shares (3) Even 50% in shares would not be described as a conservative portfolio.
• Property, plant and equipment $1.0 m
  • Buildings should be depreciated, but there is no explanation why they aren’t.
    • GMP comment: “The buildings are held in our name on behalf of others and so are not depreciated – we act as trustee.”
      • Reviewer response: Depreciation depends on the nature of the asset, not on its ownership.
  • There are neither motor vehicles nor leases shown in the accounts.
    • GMP comment: “We own no vehicles and have no leases at the date of this report.”
• Other liabilities (including Note 9)
  • There is no explanation of these amounts that are owed beyond 12 months.
• Specified reserves $4.7 m (including Note 10)
  • The source of the $2.8 m increase is not disclosed.
  • Reserves are increased and decreased by transfers, not by payments and receipts as here.
  • There is no explanation for the inclusion of trust funds within this section.
  • Nor why this trust is not included in the certificate in the Report by the Board (above).
• Asset revaluation reserve $595K
  • The existence of this reserve, or the increase this year, doesn’t match the fact that Property, plant & equipment is valued at cost.
    • GMP comment: “The Asset Valuation Reserve movement, in part, reflects the changes in the value of shares.” 
• Retained Earnings $2.1 m
  • The amount ‘transferred to reserves’, $2,754,748, does not match the amount shown as ‘Received’ in Specified Reserves, $2,764,748.
    • GMP comment: “The amount transferred to reserves is a net figure. The difference was applied to our activities.”
      • Reviewer comment: This does not make sense.

How the wealth of the charity has changed – Consolidated Statement of Changes in Equity

• This is not the correct format for this statement.
• There is no explanation as to why there is a need to distinguish between ‘Reserve transfers’ and ‘Amounts transferred (to) from reserves’.
  • GMP comment: “ACFID determines the format for the Consolidated Statement of Changes in Equity.”
    • Reviewer response: Not according to them: the ‘ACFID Code of Conduct Implementation Guidance March 2015’, page 26, says that ‘Each organisation’s Statement of Changes in Equity will be slightly different and signatory organisations are strongly encouraged to discuss with their accountants the effects that the International Financial Reporting Standards may have on their signatory organisation.’

Table of Cash Movements for Designated Purposes (page 12 of the Financial Report)

• This is not one of the statements required in a financial report.
• The usual statement about cash flows, a compulsory element of a financial report, has been omitted.
  • GMP comment: “ACFID determines the format for the ‘Table of Cash Movements’ and it is designed to assure our donors that we can fully meet our obligations and not rely on funds given for specific purposes such as those given for emergencies.”
    • Reviewer response: The Table is an ACFID requirement. It does not overrule the requirement to comply with the law, e.g. AASB 101.10. The ACFID acknowledges this in their ‘Code of Conduct Implementation Guidance (March 2015, page 27).

Essential information to go with the figures: the Notes to Financial Statements (page 8 of the Financial Report)

1. Statement of Accounting Policies

• (a) Basis of Preparation

Not all the Australian Accounting Standards needed

• The directors say the company is ‘not a reporting entity’, but they give no reason for this important decision.
• 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.

Which Accounting Standards?

The directors do not say which Accounting Standards they complied with

• (c)   Other financial assets[ix]
  • Initial recognition should have been at fair value, not cost.
  • There is no record of impairment.

Missing Notes (in addition to the ones mentioned above)

• New and revised Standards
• Accounting Standards issue but not yet effective
• Current and non-current classification
• Trade and Other Receivables
• Impairment of non-financial assets
• Remuneration of auditors
• Events after the reporting date
• Reconciliation of surplus
• Fair value measurement
• Trade and other payables
• Critical accounting judgements, estimates and assumptions
• Contingent liabilities
• Commitments
  • GMP comment: “Our reports do include
    • Current and non-current items
    • Trade and other receivables
    • Salary costs
    • Remuneration of the Auditor
    • Trade and other payables”
      • Reviewer response: It is the Note that is missing, not the figures in the statements.

Incomplete Notes (in addition to the ones already mentioned)

• Revenue
• Property, plant and equipment

Where the directors put their name to the Report (page 28 of the Financial Report)

• Consolidated statements are presented yet there is no mention of subsidiaries.

Membership of accountability organisations claimed

• Missions Interlink
  • This is not possible to verify because the membership list is not available to the public.
• Australian Council for International Development (ACFID)
  • There is no membership in the name Australian Churches of Christ Global Mission Partners, but there is the name under which they trade, Global Mission Partners (see Other Name(s), above.)

(End of review)

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

[ii] Australian Council for International Development

[iii] GMP made this comment: “Giving to COCOA is Tax Deductable. Giving to the other funds is not.” Which is what I observed.

[iv] GMP made this comment: “We have no control over when the ACNC loads reports onto its website.” But I identified the time lapse in completing the report, not in it appearing on the Register.

[v] 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.’

[vi] 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.

[vii] Entity: “Any legal, administrative, or fiduciary arrangement, organisational structure or other party (including a person) having the capacity to deploy scarce resources in order to achieve objectives” . AAS 25.10, SAC 1.6 (Glossary, www.aasb.gov.au).

[viii] This observation was added after GMP’s response.

[ix] This observation was added after GMP’s response.