Archived: Church Missionary Society Western Australia Inc, charity review

This is a charity review, a review for those with an interest in the Australian charity Church Missionary Society Western Australia Inc (CMS-WA).

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 CMS-WA.

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 10 June 2016, and invited them to comment. This was their response:

Thank you for your email of 11^th (sic) June 2016.  We appreciate the considerable research you have undertaken to inform your readers.  Whilst we do not agree with a number of your observations, please be assured that your email will be brought to the attention of the Branch Committee and if necessary, our records, with relevant public authorities reviewed for completeness.

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.
• CMS-WA’s share of a website.
• Facebook. No other social media.
• Not on LinkedIn.
• State government fundraising licence registers.
• No reviews on Glassdoor.

REGISTRATION DETAILS

Entity Subtype

• This selection has been overdue since 30 June 2015.
• ‘Advancing religion’ would seem to be the right selection according to the constitution:
  • The objects of the Branch are to carry out the principles and objects of CMS-A [The Church Missionary Society – Australia Limited] within the State of Western Australia, namely to work for the coming of God’s Kingdom through the proclamation of the Gospel of Christ throughout the world in fellowship with local churches…

CHARITY DETAILS

Legal Name

• CMS-WA is a Western Australian incorporated association (A0750136M).
• It is a mission agency of the Anglican Church (see page 27 here).

Other Name(s)

• No business names are held, so CMS-WA should always be using its full name.
  • Not like on Facebook.

Charity ABN

• Tax deductibility: No, you cannot claim a tax deduction for a donation to CMS-WA.
  • How, then, has it received $45K of ‘Tax deductible donations’ (see below)?

Charity Street Address

• Christian Conventions of WA Inc also have this as their address. Canon Raymond Arthur (see Responsible Persons, below) is a responsible person (the Chairperson) of that charity as well.
• No postal address on the website.

Website

• Not one of its own, but a page on Church Missionary Society – Australia’s site.

ANNUAL REPORTING

• AIS 2015
  • This is CMS-WA’s compulsory Annual Information Statement 2014 (AIS 2015).
  • It gives basic financial information. If you think that this might be sufficient for you
    • The statements are not general purpose financial statements, as claimed here, but the ones requiring less disclosure, special purpose financial statements.
    • ‘Employee expenses’ appears to include the $5K ‘Book-keeping fee’.
    • ‘Total expenses’ is overstated by $1K.
• Financial Report 2015
  • There is nothing in this report to say when the Committee approved the accounts (or even if they did), but the auditor signed his report on 23 October 2015, four months after year end.
  • It was then lodged three months after that, four days before the (extended) deadline.
  • 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
  • Nothing on the website. But as a branch of CMS-A, it is required to ‘carry out the principles and objects of CMS-A’, so that charity’s statement would apply.
    • CMS-A doesn’t have a conventional statement of faith on its website, but there is a short statement of what they believe under ‘Our Foundations’.
  • The Apostles Creed is included as Appendix 1 to the CMS-WA’s constitution as a ‘statement of faith’.

Date Established

• The books and records were donated to the J S Battye Library of West Australian History in 1984.
• I expect that CMS-WA is mentioned in the history on the CMS-A website, and in this book.

Who the Charity Benefits

• Vision & Mission
  • Nothing separate to CMS-A.
• Activities (What did CMS-WA do?)
  • In the AIS 2015:
    • CMS workers have continued to serve as co-labourers with over 100 international partners, including churches, schools, universities and Christian organisations, in more than 35 countries around the world. Our partners are involved in ministries that fit with our gospel vision and purpose. Our partners have welcomed CMS workers into their programs and ministries to share the lasting hope of Jesus Christ with people. We have continued to encourage people to get involved in cross-cultural mission through our six branches across Australia. The CMS-Australia office, based in Sydney, works for and on behalf of the branches to train cross-cultural workers, place them with international partners and provide pastoral care for them. CMS is a deductible gift recipient for provision of overseas aid in several countries, for aboriginal work in North Australia and in support of St Andrews Hall, the CMS training college in Victoria.
      • Apart from substituting ‘WA’ for ‘six branches across Australia’, this is identical to what appeared in CMS-A’s AIS for last year. So nothing specific about either CMS-WA’s activities, or 2015’s activities, as requested.
  • Current activities are described on the webpage.
• Outcomes (What did CMS-WA deliver?)
  • CMS-WA did not respond to the request in the AIS for its outcomes.
  • Nothing found.
  • I’m sure there would be some anecdotal information under ‘Resources’ in the main menu of CMS-A’s site.
• Impact (How were people’s lives improved?)
  • Nothing found.
  • Perhaps there’s some anecdotal information under ‘Resources’ in the main menu of CMS-A’s site.

Size of Charity

• CMS-WA is less than 100K over the threshold for this size, so well short of the next one (the largest).

Financial Year End

• This means that the next financial report is due by 31 December 2016 – or 31 January if the ACNC again gives its (generous) extension (to all charities). 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)^[1]

• From its website, it is not clear how CMS-WA raised its $316K of donations, but it doesn’t have a fundraising licence in WA.
  • Nor in any of the other six states that have a licensing regime.
• CMS-WA doesn’t have a request for donations on its webpage.

Operates in (Countries)

• For this to be blank, presumably any missionaries recruited in WA belong to CMS-A.

CHARITY’S DOCUMENT (SIC)

• An Annual Report/Review can be lodged on the ACNC Register, but CMS-WA hasn’t done this.
• Nor is there one on the website. (Nor one elsewhere on the website.)

RESPONSIBLE PERSONS

No. of Australian ‘responsible person’ positions^[2]

Canon Raymond Arthur     This function was still not working

Carol Dolan

Naomi Flavell

Bradley Galvin

Khim Harris

Gregory Heath

Caitlin Healy

Matthew Lovell

Stephen Pivetta

Peter Schendzielorz

• The directors are not shown on the website.
• Under ‘Position’: the constitution also requires a deputy Chairperson.

(End of review of the ACNC Register information)

Latest financial report – detail^[3]

• This report did not get a ‘clean’ audit opinion. In fact, it is arguable that it should have got an even stronger indictment of its quality than the auditor gave it.
  • The auditor does not have the professional registration that is required to do this audit.
• The report is missing two of the four compulsory financial statements.
• The directors believe that a special purpose financial report is acceptable. This choice allows them to make less than a full disclosure about CMS-WA’s finances and operations, and is implicitly a statement that any current or prospective user is able to command the preparation of a financial report tailored to their needs. Do the directors realise they are saying this?
• The report does not explain the relationship between CMS-WA and CMS-A, something that is integral to understanding the accounts.
• The majority of the required Notes are missing.

Where the directors put their name to the report – the Statement by the Branch Committee (page 2 of the Financial Report)

• This is unsigned. (Have the accounts even been approved?)

An independent opinion on the financial statements – the Independent Audit Report… (page 3 of the Financial Report)

• This auditor, Jeffrey T. Byerley, because he is not a ‘registered company auditor’, is not qualified to do this audit.
• This report is a not a ‘clean’ opinion, but a qualified opinion. (Read here to draw the right conclusions from this).
  • He says that CMS-WA ‘has determined that it is impracticable to establish control over the collection of gifts and donations prior to entry into its financial records’. So for 92% of the revenue, CMS-WA cannot be sure that what is reported is actually all that was given by donors. Why not? Other charities can do it.
• With this size gap in the audit procedures, it could be argued that CMS-WA got off lightly – an adverse opinion may well have been more appropriate.
• He has also omitted the obligatory ‘Emphasis of Matter’ paragraph.
• And allowed CMS-WA to submit a Report that is missing two of the four required financial statements.

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

• Cash and cash equivalents $433K, including Note 2
  • Debtors $9K
    • This is neither cash nor a cash equivalent, but a separate asset.
    • Nothing is sold on credit, so why debtors?
    • Why such a large increase over last year?
    • Has the collectability of this money been considered?
  • CMS House Account
    • There is no explanation of this item.
  • Legacy Endowment Account
    • There is no explanation of this item.
  • Even without Debtors, the total represents 15 months of revenue.
• Property, plant & equivalent (sic) $631K, including Note 3
  • I think they meant ‘equipment’, not ‘equivalent’.
  • Woodvale House $631K
    • Why is this held?
    • If rented (to Canon Raymond Arthur?), where is the rent under Income?
    • Is a valuation planned?
    • Why is the building not depreciated (an Accounting Standard requirement)?
• Provisions, including Note 5
  • No long service leave?
• Reserves $829K: there is no breakup of this amount.

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

• This is a long-outdated format for this statement. It is missing an ‘Other comprehensive income’ section, and it is revenue that has to be disclosed, not income.
• General missionary support $238K
  • Where is the ‘specific’ support?
  • If missionaries are being supported, why is the Register blank under Operates in (Countries)?
• Tax deductible donations $45K
  • There is no explanation for the presence of this item when donations to CMS-WA are not tax deductible.
• Two disclosures that it is reasonable for you to see are administration expenses and fundraising expenses. Neither are disclosed here.
• Funds remitted to CMS-Aust $193K
  • There is no explanation for this item.
  • It represents 56% of revenue.
• Events expenses $7K
  • Deducting this from ‘Mission Events and Projects’ income leaves less than 2K. Were the events worth the effort?
• Staffing expenses
  • This represents 23% of expenses, 20% of revenue, and 22% of donations and bequests.

Essential information to go with the figures – the Notes to and forming part of the financial statements (page 6 of the Financial Report)

• Note 1: Summary of Significant Accounting Policies
  • The directors don’t say why they think that CMS-WA is not a reporting entity.
    • The implication is that they think that all those currently involved with CMS-WA, plus all those who might become involved as a result of CMS-WA’s promotions and website, can get a financial report tailored to their particular needs.
  • Missing:
    • The type of entity (individual, not-for-profit), functional and presentation currency,
    • Date the accounts were authorised for issue.
    • Which Accounting Standards they complied with.
  • (b) Plant & Equipment
    • CMS-WA also has property.
    • Missing: impairment as part of the valuation, the useful lives adopted, policies on the review of the depreciation factors and derecognition.
  • (c) Employee Benefits
    • What are the benefits?
    • Page heading duplicated.
  • (d) Goods and services tax
    • Missing: policies on receivables and payables, cash flows, and commitments and contingencies.
  • (e) Revenue
    • The policy on legacies is not consistent with the Accounting Standards.
    • The policy on interest is not consistent with the accruals basis.
    • There haven’t been any grants for at least two years.
  • (g) Critical Accounting Estimates and Judgments
    • The most important input is not mentioned: prediction of the future.
  • Missing policy Notes:
    • New, revised or amending Accounting Standards and Interpretations adopted
    • Current and non-current classification
    • Impairment of non-financial assets
    • Trade and other payables
    • Fair value measurement
    • New Accounting Standards and Interpretations not yet mandatory or early adopted
• Notes normally included, even if the amounts are zero, but missing here:
  • Remuneration of auditors
  • Contingent liabilities
  • Commitments

Membership of accountability organisations claimed

• None claimed on the website.
• However, CMS-WA is a member of Missions Interlink.

(End of review)

1. 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.’ ↑
2. 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. ↑
3. 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. ↑