This is a review in the series ‘Australian Council for International Development (ACFID) Members.’ ACFID ‘is the peak body for Australian non-government organisations (NGOs) involved in international development and humanitarian action.’ It requires Members to adhere to a Code of Conduct.
The ACNC, in their article, Donating to Legitimate Charities, gives “some things to consider to help you make sure your donation is going where it is intended”:
- Check the charity’s name.
- Ask for identification from anyone seeking a donation.
- Be careful of online requests for donations.
- No tax deduction doesn’t mean the charity is not a legitimate one, and
- Find out more about how the charity says it uses donations
A search for ‘Australian Mercy’ on the ACNC Register gives the following result:
The first one, with the ‘Limited’, is the other name for ‘Australian Mercy’ on the Missions Interlink membership list (see above), and the ACNC Register confirms that Australian Relief & Mercy Services Limited is ‘Also known as Australian Mercy.
Because Australian Mercy still doesn’t have the provisions in its governing document that would allow it to omit ‘Ltd’/Limited’ at the end of its name, it should not be using ‘Australian Relief & Mercy Services’ without registering it as a business name.
Australian Mercy used collectors at an event in 2017, but there is nothing to indicate that it has subsequently.
The web address begins with a closed padlock symbol, so the website is secure [the ACNC article above].
But there is still nothing about security of your information – at least not on the first page (where you enter your personal information).
Australian Mercy’s ABN record (via the ACNC Register) shows that your donation to either it, or its Fund, ARMS Overseas Aid Fund, will entitle you to a tax deduction.
The Fund is listed in the giving section with a number of other ‘Trust funds’ to which you can give.
The first giving buttons, the three largest, do not mention tax deductibility. All the other options do. We assume that this is an oversight.
Question 5 The use of your donations
Context – what they do
The audited account of how donations are used is the Financial Report on the ACNC Register.
The directors signed a declaration [Director’s Declaration, Financial Report 2021] that ‘the financial statements and notes’:
Whatever they say in Note 1, a ‘true and fair view’ requires compliance with the Australian Accounting Standards. But Australian Mercy, despite a message from the AICD three years ago to take our comments seriously, remains materially flawed in this area:
‘Statement of Profit or Loss and Other Comprehensive Income’
- There is no explanation for how a ‘Large’ overseas aid charity can be run with no employees.
- There is no explanation for the highly unusual figure of zero for ‘Program Support Costs’ (especially when ‘Funds to International Programs’ are $457K.
- The nature of ‘Other Income’, $199K, other than for $1K, is not given.
- Why is ‘Community Education’ expense included in ‘International Programs’ expense?
The balance sheet
- It has the title of another statement.
- A very large – $382K – negative, and strange, figure, ‘Bank Transfer – National Office is included under ‘Cash and Cash Equivalents’.
- This means that the amounts for the ‘Bank accounts’ are incorrect.
- ‘Accounts Receivable’ and the GST accounts are incorrectly classified.
- ‘Provisions’ are mixed with ‘Payables’.
‘Statement of Changes in Equity’
- It is incomplete:
- There are no figures for the prior year.
- Not all the line items required are included.
‘Statement of Cash Flows’
- It is incomplete.
‘Income and Expenditure Statement’
- Included without explanation. Not audited, and not marked as unaudited.
Notes to the Financial Statements
- There is nothing about related parties.
- Most of the required Notes are missing.
Nearly all of these deficiencies were present in 2019, and if they weren’t, others have taken their place.
Once again, it doesn’t comply with the ACNC’s requirements.
The directors think that continuing to have a significant lack of internal controls is doing the right thing by their stakeholders. This lack has caused the auditor, again, to issue a qualified audit opinion. On two grounds:
- Despite the fact that ‘cash donations are a significant source of revenue for the company’, the directors have decided that ‘it is impractical to establish control over the collection of cash donations prior to entry’ in the’ accounting system[‘Qualification’ paragraph]. Most other charities don’t have this problem.
- Despite the fact that ‘the company derives a substantial portion of its income from donations and sales to related parties’, the directors have decided not to establish ‘effective control over such transactions…until they are received and entered in the accounting records’. Why?
What this means is that the company can give you no assurance that all the (a) cash donations, (b) donations from related parties, and (c) money from sales to related parties have been officially received by the company (and therefore included in the financial statements).
In addition, the auditor
- did not audit two of the six statements he is required to audit, and
- issued a report in a format different from the usual.
Here are the directors who thought that the reporting, and an audit qualification, was acceptable:
Rodney Alan Richards
Nicholas John Matthews
Kris Leonard Thomson
Bruce Colin Skinner
Christopher Lee Harrison
Dianne Margaret Clark
These are the same directors who approved the accounts in 2019.
All these people are involved with YWAM’s Australian operation – no directors are independent of YWAM.
The rest that is normally included in a review
Sorry, after the above findings, we didn’t see much point.
Australian Mercy implies that they may receive feedback, but don’t invite it. They have a published procedure for responding to complaints, but don’t invite them.
Members of Missions Interlink (see the introduction) have to accept (and follow) a set of standards:
We sent Australian Mercy a draft of this review. They….did not respond.
- See here for the previous review. ↑
- The reviewer safely pressed through this warning (on 8.12.2022): ↑
- A section in the article, Donating and Volunteering:
- Focus on the nature of the charity’s work, its beneficiaries and the impact the charity is having in the community.
- Is it clear what the charity is trying to achieve and how its activities work towards its objectives?
- Would you like to spend your money, or time if volunteering, to support these objectives?
- Is the charity being transparent about its activities?
- It is not one of the many names it has registered: ↑
- In the Australian Mercy Annual Reports (sic) 2020-2021: ↑