Archived: Bridgeway Publishing Foundation Trust, charity review

This is a charity review, a review for those with an interest in the Australian charity Bridgeway Publishing Foundation Trust (BP).

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 decision about BP.

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 17 February 2016, and invited them to comment. They sent the following explanation and some other comments, comments that have been inserted in the review.

How Bridgeway works

The way Bridgeway works is that volunteer couples pack and post books and handle the correspondence with those who receive the books and those who sponsor them, but also encourage Christians here in Australia to pay for them. We have no staff, no office, no vehicles, no equipment, no independent funds. We all work from our homes, yet over the years we have been able to send over a million books to people all over Africa and Asia.

From time to time we get some additional gifts of money that we can pass on. Out of the thousands of people who’ve received Bridgeway books, we have over the years been gradually forming a group of people and ministries (more than seventy in number, and spread around more than twenty countries of Africa and Asia) who to us are special in some way and to whom we may send a gift of money every now and then. Nothing regular. This money comes from a variety of people, some anonymous, some who give to Bridgeway.

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.

Sources

• ACNC Register (including links)
• Google search on the charity’s name(s).
• BP website. (Note: In the name ‘Bridgeway Publications’, not the ‘Bridgeway Publishing’.)
• Not on social media, or LinkedIn.
• State government fundraising licence registers.
• Nothing under either name on Glassdoor.

REGISTRATION DETAILS

Entity Subtype

• A subtype that is consistent with sharing the Gospel.
• The trust deed says the fund is to help those who are already Christians:
  • The Founder wishes to establish a non-profit fund exclusively for the purposes of providing money, literature, property and/or benefits to or for Christians, Christian Churches and Christian organisations in developing countries and nations.

CHARITY DETAILS

Legal Name

• BP is a trust, an unincorporated entity governing by a trust deed (see Charity’s Document (sic), below).

Other Name(s)

• This a trading name. BP trades under this name, but in order to continue to do so legally, BP needs to register the name as a business name. Although the name is already registered, it belongs to a partnership of three of BP’s responsible persons (see below), so perhaps they might give it up.
  • BP comment: “five of BP’s”(responsible persons)
    • Reviewer’s response: Three or five? Put ‘Bridgeway Publications‘ in a search of the Business Names Index here.

Charity ABN

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

Charity Street Address

• Postal address, from the website: GPO Box 2547, Brisbane QLD 4001

ANNUAL REPORTING

• AIS 2015
  • This is BP’s compulsory Annual Information Statement 2015 (AIS 2015).
  • It was lodged three and a half months after year end, and three weeks after the auditor signed his report (see below).
  • The usual basic financial information is absent because, as a Basic Religious Charity (see below), BP is exempt from supplying any such information.
    • Voluntary disclosure is possible but BP chose not to.
• Financial Report 2015
  • Even if they weren’t a Small charity, and therefore exempt from lodging a Financial Report, they would still be exempt because of their status as a Basic Religious Charity.
  • BP could have voluntarily lodged their report with the ACNC, but they chose not to.
    • • The trust deed requires an annual audit, and because the fund is a ‘non-profit public fund’ that solicits donations from the public, it seems reasonable that the public have access to the result.
      • Although not mentioned by it on its website, BP is a member of Missions Interlink[ii]. One of their requirements is that members ‘have available for its members and supporters a clear and appropriate financial statement which has been approved by its auditor [Standards Statement, 4.1]. So again public access would seem to be reasonable.
        • BP comment: “We have no issue with fulfilling Mission Interlink’s requirements and have provided appropriate financial information on supporter’s requests in times past.”
  • BP willingly and promptly sent me a copy of the report when I requested it.
    • BP comment: “Ted, I sent you the Financial Report as I received it electronically from the auditor, so there are no trustee signatures (though I now know there should have been) – attached see the Trustee Declarations signed on 4-11-15.”
  • Neither Trustees’ Declaration in the Financial Report is signed. The auditor signed on 22 September 2015, and he should not have signed until after they did, so it is likely that the Report was finished around two and half months after year end.
    • BP comment: “Ted, again I was not aware the auditor should sign first.”
      • Reviewer’s response: Second, not first.
  • The coverage of finances in this review is left until the financial report proper (see Latest financial report – detail, below).

ABOUT THE CHARITY

• Statement of Faith
  • None found.
  • Nothing in the trust deed.

Date Established

• No history of BP found.
  • BP comment: “Registered 5 August 1988”

Who the Charity Benefits

• Vision
  • None found
• Mission
  • None found
• Activities (What did BP do?)
  • The Description of charity’s activities and outcomes in AIS 2015 does not appear to be specifically about 2015:
    • We sought and accepted donations from people and organizations so that we could carry out our charitable purposes in providing money, literature, property and/or benefits to or for Christians, Christian Churches and Christian organisations in developing countries and nations.
      • BP comment: “Ted, our activities remain the same year to year. It needs to be understood that we don’t ‘fundraise’ through special events etc.         From time to time volunteers speak at church meetings and talk about what BP does – but even then we simply make people aware of needs.”
• Outcomes (What did BP deliver?)
  • BP did not respond to the request in the AIS 2015 for a description of its outcomes in 2015.
  • None found on the website.
• Impact (How were people’s lives improved?)
  • Nothing systematic found.

Size of Charity

• BP’s size should be Medium, not Small. The mistake probably comes from using gross profit rather than sales. Check here.
  • BP comment: “We understand the need to be listed as medium size charity as a result of increased support in the last 2 financial years.”

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.
  • You may therefore want to request more up-to-date information.

Basic Religious Charity

• Here are the qualifications to be one of these (and therefore exempt from any financial reporting, whatever the size of the charity).

WHERE THE CHARITY OPERATES

Operating State(s)[iii]

• It is not clear from the website why NSW is included.
  • BP comment: “Ted, we have a volunteer couple who pack and send biblical resources of Bridgeway’s from their home in NSW and now in VIC another couple do the same, that is why NSW is mentioned.”
• It does not hold a fundraising licence in either of these states. Is fundraising part of the operations in these states?
  • BP comment: “The volunteers in NSW and now VIC may from time to time be given opportunity to tell folk in churches about the ministry of Bridgeway. I will endeavour to establish whether these times are classified as fundraising.”
• Nor does it hold a licence in any of the other five states that have a licencing regime.
  • Apart from exemptions, whether it needs one depends on whether those states think that BP, by calling for donations publicly, are ‘fundraising’ in their State.

RESPONSIBLE PERSONS

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

Michael Conolly                This function was unavailable at the time of writing

Gordon Cowell

Donald Fleming

Ian Fletcher

Stephen Stathis

• There is no mention of the trustees on the website.
• Nor in the Financial Report.  

(End of review of the ACNC Register information)

Latest financial report – detail

• There are serious questions over the quality of the audit – see the last section below.

Where the trustees put their name to the report – the Trustees’ Declaration (page 2 of the Financial Report)

• The directors do not say why they decided that the trust is not a reporting entity. (Nor do they in Note 1, referenced here.)
  • Are they aware that this means that the trust is prepared to tailor a financial report for anybody who wants one?
    • BP comment: “No”
  • The trust is a public fund. It seeks money from the public via the internet. The onus is therefore on the trustees to refute the presumption that it is reasonable to expect the existence of users, either existing or prospective, who are dependent on the type of report that is designed for those who cannot command the preparation of a report tailored to their needs, that is, one that is produced without a subset of users in mind.
• It is unsigned (and therefore undated).
  • BP comment: “Explained above”

Where the trustees again put their name to the report – the Trustees’ Declaration per section 60.15 of the Australian Charities and Not-for-profits Commission Regulation 2013 (page 3 of the Financial Report)

• Why, when no report is required by the ACNC, is this declaration included?
• It is unsigned (and therefore undated).
  • BP comment: “Explained above”

What’s left at the end of the year – the Balance Sheet (page 4 of the Financial Report)

• ‘Cash at Bank and on Hand’ should, as Note 1 acknowledges, be ‘Cash and cash equivalents’, ‘Receivables and Prepayments’ should be separate.

What was earned, what was consumed during the year – the Income Statement (page 5 of the Financial Report)

• The structure of this statement is not consistent with the Accounting Standards.
  • ‘Revenue’ is not disclosed.
  • Rather than the numerous categories here, and a mixed classification (function versus ‘by nature’ of expenses), the display should be simply

Sales revenue

Less Cost of sales

= Gross Profit

+ Other income

Less functional expenses

         Other expenses

= Surplus before tax

Less tax

= Surplus after tax

• • ‘Other comprehensive income’ is missing.
  • There is no explanation for how ‘Gift and donations paid’ differs from ‘Aid Project Donations Disbursed’.
  • Neither ‘Asset Revaluation’ nor ‘Transfers from (to) Reserves are part of the calculation of surplus.
  • There is no disclosure of
    • Employee benefits (the cash flow statement shows that payments were made)
      • BP comment: “Bridgeway has no employees only volunteers.”
    • Superannuation expense (or an explanation for its absence)
      • BP comment: “No employees”
    • Administration expense (commonly used in charity evaluation)
    • Fundraising expense (commonly used in charity evaluation)
      • BP comment: “not applicable – any cost of promotion of Bridgeway’s ministry as described above is at the volunteer’s expense”

 Essential information to go with the figures – the Notes to and forming Part (sic) of the Accounts (page 8 of the Financial Report)

• NOTE 1: Statement of Significant Accounting Policies
  • • The directors do not say why they believe that the trust is ‘not a reporting entity’.
    • There is no explanation why, if BP doesn’t have to report to the ACNC, they have prepared the report to satisfy the ACNC’s requirements.
    • It is not true that ‘there is no requirement to apply accounting standards’ if you are not a reporting entity.
    • In addition to the Standards listed, preparation should also have been consistent with the recognition and measurement requirements of all the other Standards.
    • Missing information:
      • Functional and presentation currency
      • Type of organisation
      • Individual entity?
      • When the accounts were authorised for issue.
    • Since the trustees have not said that they have the power to amend the financial statements after issue, we can assume that they don’t.
    • BP is governed by a trust deed, not a constitution.
    • The ‘Reporting Basis and Conventions’ explanation is confusing.
  • (d) Revenue
    • This Note does not match what is in the income statement.
      • Presumably ‘Interest revenue’ is the same as ‘Revenue from Investments’?
      • What about donations, sponsorship and royalties?
  • Missing policy Notes
    • New, revised or amending Accounting Standards and Interpretations adopted
    • Current and non-current classification
    • Trade and other receivables
    • Fair value measurement
    • Property, plant and equipment (it is unusual, as in BP’s case, not to have any)
      • BP comment: “BP has no property, plant and equipment – all volunteers work from their homes at their own expense – stocks of books are held on sites at no expense to BP – office equipment eg printers etc is all owned by volunteers and they pay for all the consumables etc themselves.”
    • New Accounting Standards and Interpretations not yet adopted
    • Critical accounting judgements and estimates
  • Missing Notes
    • Contingent liabilities
    • Commitments
    • Events after the reporting period

An independent opinion on the financial statements – the Independent Audit Report…(page 11 of the Financial Report)

• The auditor has deviated, materially and frequently, from what is required by the Australian Auditing Standards.
  • This is a ‘clean’ audit opinion. This is despite saying that he didn’t audit ‘the system of internal control over cash receipts of donations, subscriptions or other fund raising activities’, a system that was responsible for 95% of income. So on the one hand he says that the financial report is free from material misstatement, while on the other he tells the reader that they can take no confidence from the audit that all the money from that was given or sent to BP as a result of its fundraising actually made it into BP’s bank account.
    • That this lack of auditing was due solely to the auditor not wanting to spend the time, not to a lack of internal controls, make it even more troubling.
    • Not either doing this work, or substitute testing, is not an option open to an auditor who is following the Auditing Standards.
    • The Limitation to Scope paragraph is not an inclusion that is consistent with the Auditing Standards.
    • A ‘clean’ opinion when there is a lack of controls – not a lack of auditing of them – requires an Emphasis of Matter paragraph.
  • He omits the Trustees’ Declaration from the scope of his audit.
  • The Auditing Standards no longer include the line ‘No opinion is expressed as to whether the accounting policies…are appropriate’.
  • His description of the audit does not include the required words for a fair presentation framework.
  • The last paragraph under Auditor’s Responsibility is not consistent with the Standards.
  • His opinion cites ‘the constitution’. Even with the right document – the trust deed – this is an incomplete description of the reporting framework used by BP.
  • The unusual inclusion of Additional Notes telling the reader of an additional procedure he was unable to perform confuses the message (and is contrary to the Auditing Standards.)

(End of review)

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

[ii] A valuable membership for some– see ‘What membership means’ here.)

[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.