Archived: Melbourne School of Theology, charity review

This is a charity review, a review for those with an interest in the Australian charity Melbourne School of Theology (MST).

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 MST.

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 23 December 2015, and invited them to comment. On 5 January 2016, the Board chair, Rosemary Wong, via the Vice Principal (Community & Operations), declined the invitation.

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 name.
• MST website. MST on FaceBook, and YouTube. Plus MST on LinkedIn, both under its current name and its former name.
• State government fundraising licence registers.
• www.glassdoor.com

REGISTRATION DETAILS

Entity Subtype

• MST is a bible college but ‘Advancing religion’ is not mentioned. Compare with, for instance, Bible College of Queensland, which also has deductible gift recipient status despite being about ‘advancing religion’.
• The ‘Objects’ in the constitution make education the aim of MST, and don’t mention the Gospel.

CHARITY DETAILS

Legal Name

• Not to be confused with another charity, The Trustee For (sic) Melbourne School of Theology Ministry Fund.
  • A separate charity, yes, but maybe the financial information should be consolidated with MST? See Latest financial report – detail, below.
• Another MST business name was current during the year: Nash Institute for Advanced Studies in Theology and Culture.
• MST is a public company, a company limited by guarantee.
• It is permitted to omit ‘Ltd’ on the end of its name.

Charity ABN

• Tax deductibility: You can claim a tax deduction for a donation to MST.
• As you can for its two funds, Bible College of Victoria Building Fund and Bible College of Victoria Library.

Charity Street Address

• The postal address, from the website: PO Box 6257 Vermont South VIC 3133

ANNUAL REPORTING

• AIS 2014
  • This is MST’s compulsory Annual Information Statement 2014 (AIS 2014).
  • It gives basic financial information. If you think that this is sufficient for you, all the figures match those in the financial statements except for a minor mistake with interest received ($1K overstated).
• Financial Report 2014
  • The report was signed four months after the year end.
  • It was then lodged two months after that.
  • 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

• Called their ‘theological position’.
• Which is the same, with the addition of the first paragraph, as their ‘doctrinal basis’ in the constitution (see Charity’s Document (sic)).

Date Established

• Here’s a history.

Who the Charity Benefits

• Vision
  • None found.
• Mission
  • None found.
• Activities (What did MST do?)
  • From Description of charity’s activities and outcomes in the AIS 2014:
  • The principal activity of the Company is the provision of training facilities in the theological discipline at a post-secondary level.
• Outcomes (What did MST deliver?)
  • MST did not respond to the request in the AIS 2014 for a description of its outcomes.
  • None found on the website.
• Impact (How were people’s lives improved?)
  • Nothing found.

Financial Year End

• This means that the next financial report is due by 30 June 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)[ii]

• MST calls for donations on its website.
• It does not hold a fundraising licence in this state, nor in any of the other six that have a licencing regime.
  • Whether it needs these licences depends on whether those states think that MST, by calling for donations on their website, are ‘fundraising’ in their State.

Size of Charity

• With a revenue of $2.26 m, MST easily qualifies in the largest of the ACNC three size categories (‘Large’).

CHARITY’S DOCUMENT (SIC)

• There is no Annual Report/Review available on the ACNC Register.
• Nor on the MST website.

RESPONSIBLE PERSONS

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

Geoffrey Cox                                9

Yean Lim                                      4

Kathryn Pocklington                  2

Glenn Ward                                 2 (but not The Trustee for the MST…)

Rosemary Wong                          2

Michael Wong                             9

David Rietveld                             4

Patrick Lok                                   9

Mark Emerson                            3

Brian Bayston                              9

• This listing does not match that on the website: there Yean Lim is listed twice and Rietveld and Wong are not included.
  • Neither are they included in the Directors’ Report.
• Is David Rietveld this one?

(End of review of the ACNC Register information)

Latest financial report – detail

• There is no explanation why the Melbourne School of Theology Ministry Fund, for which MST is the trustee and the ‘responsible persons’ are identical[iv], is not consolidated with MST.
• Given that MST has staff, students and supporters numbering in the hundreds (more?), there is insufficient explanation by the directors for their conclusion that none of their users, either current or prospective, depend on the type of financial statements that are fully compliant with the Australian accounting standards (see Note 1, below.)

Directors’ Report (the first page of the Financial Report)

• No such report is required by the ACNC.
• Missing sections:
  • Performance measures
  • Information on directors
  • Company secretary
  • Meetings of directors
  • Contributions on winding up – although an incomplete version is in the Notes.

Auditor’s Independence Declaration…– the second page of the Financial Report

• The ACNC does not require this to be lodged.

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

• ‘Revenue’ should be disclosed.
• The section below ‘Total comprehensive income…’ should not be included.
• The following expenses are not disclosed:
  • ‘Finance costs’
  • Fundraising
  • Superannuation expense
  • Cost of sales (for the ‘Hire of facilities & Catering’ revenue)
• The outflow here is ‘expenses’, not ‘expenditure’ (the latter can include, for instance, asset purchases).
• The expenses classification is a mixture of the two permitted methods.

Where the earnings came from (including Note 2)

• ‘Fees’ – presumably from students – comprise 58% of income.
• The next largest source is supporters – 25%.
• 16% – taking the total to 99% – comes from ‘Hire of Facilities & Catering’.
• ‘Investments’ (see below) are held. No dividends?
• The gain on the sale of assets is not revenue.
• Other than splitting $31K of ‘Sundry Income’, Note 2 duplicates what is here.
  • Interest received:
    • Should be ‘Interest revenue’.
    • Why ‘Other persons’?

What was consumed during the period (reordered by size)

• Salaries & Oncosts $1.38 m: Is this equivalent to the Accounting Standards’ term ‘employee benefits’?
• Faculty & Student Costs $369K: There is no description of what is included in this item.
• Administration Expenses $222K: This represents 10% of ‘income’.
• Depreciation of Fixed Assets $160K: ‘Fixed assets’ is an antiquated description.
• Household Expenses $23K: For whose household were these?

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

Assets

• Cash $138K (including Note 3)
  • This should be ‘Cash and cash equivalents’.
  • Where is the separate accounting for the monies received into each of the two funds that attract a tax deduction (see Charity ABN, above)?
• Receivables $184K (including Note 4)
  • This should be ‘Trade and other receivables’.
• Investments $500K
  • This is the majority of the current assets total, yet there is no explanation
• Land, Buildings, Plant & Equipment $10.55 m (including Note 5)
  • As acknowledged in Note 1, this should be ‘Property, Plant and Equipment’
  • The heading on Note 5 does not match the contents.
  • The required reconciliation of written down values is missing.
  • Neither the nature nor the timing of the valuation of the property is shown.

Liabilities

• Accounts Payable $104K (including Note 6)
  • This should be ‘Trade and other payables’
• Borrowings $82K (current), $536K (non-current) (including Note 8)
  • This should be ‘Financial liabilities’
  • Bank Bill Business Loan $418K:
  • There is no reason given for this sizeable borrowing.
  • Nor are the terms disclosed.

• Provisions $175K (current), $43K (non-current) (including Note 7)
  • The last two items are not normally called ‘provisions’

Where the cash came from and went to – the Statement of Cash Flows (the fifth page of the Financial Report)

• Cash Flow From Operating Activities
  • Is the rental income $299K more properly described as hire income?
  • ‘Bequests and legacies’ is missing.

Movements in the net wealth of the charity – the Statement of Changes in Equity – the sixth page of the Financial Report

• ‘Shareholders’ is not the correct name for the members of this type of company..

Essential information to go with the figures – the Notes to the Financial Statements – the seventh page of the financial report

• 1. Statement of Significant Accounting Policies
  • The directors say the company is a ‘not a reporting entity’ because ‘there are no users who are dependent on its general purpose financial reports’.
    • 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. This is highly unlikely. No such offer is made on the website.
    • 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.
  • The Accounting Standards that were followed are not disclosed.
  • Missing information:
    • Functional and presentation currency
    • Registered office and principal place of business (if different)
    • When the statements were authorised for issue and whether they can be amended and reissued.
• Revenue
  • The two largest sources of revenue are not mentioned.
  • Nor is interest.
  • There is a policy on grants when there is no grant revenue.
• Property Plant & Equipment
  • There are no leasehold improvements, so no need for the policy note.
  • The ‘depreciable rates’ listing does not match the assets held.
  • Policies on derecognition and the review of depreciation factors are missing.
• Cash
  • This should be ‘Cash and cash equivalents’
  • Short-term deposits would never be included by MST? (Three months or less is normal.)
• Incomplete policy Notes
  • ‘Net Fair Values’
  • ‘Employee Entitlements’: short-term entitlements.
  • ‘Liability of Members’: the amount of the guarantee and either the total liability or the number of members.

• Missing policy Notes
  • Current and non-current classification
  • Goods and services tax (GST) and other similar taxes
  • New Accounting Standards and Interpretations
  • Critical accounting estimates and judgements.
  • Impairment of non-financial assets
  • Trade and other payables
  • Trade and other receivables

• Note 9 Contingent Liabilities
  • Don’t student fees have to be repaid under certain circumstances?

• Missing Notes
  • Commitments
  • Events after reporting period

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

• The auditor signed before the second director had signed the Directors’ declaration.
• This is a ‘clean’ opinion.  Read here and here to draw the right conclusions from this.

Membership of accountability organisations claimed

• None claimed. MST is, however, a member of Missions Interlink.

(End of review)

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

[ii] 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.’

[iii] 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.

[iv] I have assumed that ‘Glenn Ward’ on the Register for the Trust is meant to be ‘David Ward’, one of the directors of MST.