Archived: Operation Mobilisation Australia Ltd, charity review

This is a charity review, a review for those with an interest in the Australian charity Operation Mobilisation Australia Ltd (OM).

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 OM.

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 29 January 2016, and invited them to comment. They did not respond.

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 claimed.

Sources

• ACNC Register (including links)
• Google search on the charity’s name(s).
• OM website.  An OM iPhone app. is also available.
• OM on FaceBook, Twitter, Instagram and Vimeo, one page down on the Home page. Not on LinkedIn.
• State government fundraising licence registers.
• Glassdoor reviews

REGISTRATION DETAILS

Entity Subtype

• A subtype that is consistent with sharing the Gospel.
• The constitution provides that
  • ‘The Principal Purpose for which the Company is established is:
    • (i) to witness and serve the gospel of our Lord Jesus Christ.
    • (ii) by accepting the statement of faith and belief adopted by Operation Mobilisation International and in fellowship with the international and national organisations of Operation Mobilisation International to develop a life of faith, love and prayer through which the gospel of our Lord Jesus Christ may be shared and lives and communities transformed;… [clause 1.4 (a)].

CHARITY DETAILS

Legal Name

• OM is a public company, a company limited by guarantee.
• It is allowed to omit ‘Ltd’ on the end of its name.
• OM is the ‘international branch of OM International’.
• OM, or at least its directors, control three other charities:
  • OM Australia Inc.
    • This is ‘a division of the international faith-based mission known as Operation Mobilisation’ [clause 2, constitution].
    • It told the Senate Foreign Affairs, Defence and Trade References Committee in 2014 that it traded as OM Aid & Relief. However, it does not have the right to trade under that name.
    • It also trades under the name Relief Development Justice, also not registered.
    • It is on FaceBook, but has not posted since 2009.
  • OM Overseas Aid Fund
    • OM Australia Inc is the trustee of this fund.
  • The Trustee For Om (sic) Training College Building Fund
    • OM is the trustee of this fund.
  • Despite this control, there is no mention of these other charities in OM’s Financial Report.
    • There is no explanation why their information is not consolidated with that of OM.
    • In the absence of consolidation, they are not even mentioned as related parties.

Other Name(s)

• This is neither a business name or a trading name, as is claimed here.
• The following business names should be recorded here[ii]:
  • Logos Hope
  • MV Doulos
  • OM Int’nal
• OM run Teenstreet. It has its own website, and FaceBook page, but for some reason the business name has been removed. If entitled to an ABN, then it needs to register.

Charity ABN

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

Charity Address for Service

• I have no reason to believe that this doesn’t work.

Charity Street Address

• There is no postal address on the website.

Email

• I have no reason to believe that this doesn’t work.

ANNUAL REPORTING

• AIS 2014
  • This is OM’s compulsory Annual Information Statement 2014 (AIS 2014).
  • It gives basic financial information. You can rely on the ‘Balance Sheet Extract’, but unfortunately in the ‘Income Statement’ only the two totals and the surplus match the Statement of Profit or Loss and Other Comprehensive Income.
• Financial Report 2014
  • Although the directors agreed in April 2015 for the statements to be issued, they didn’t sign until June, six months after year end. (However, the auditor signed before them, in May.)
  • It was then lodged right on the six-month deadline.
  • 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
  • Second last page here. (A tip: the landing page for ‘About us’ only scrolls by touch.)
  • The constitution says that OM subscribes to the OM International statement of faith.

Date Established

• No history of OM found, but there is a brief one of OM International here.

Who the Charity Benefits

• Vision
  • None found
• Mission
  • None found
• Activities (What did OM do?)
  • From the Description of charity’s activities and outcomes in AIS 2014
    • Recruiting, training and caring for missionaries.
• Outcomes (What did OM deliver?)
  • OM did not respond to the request in the AIS 2014 for a description of its outcomes in 2014.
  • None found on the website.
• Impact (How were people’s lives improved?)
  • Nothing systematic found.

Size of Charity

• With a revenue of $2.36 m, OM easily qualifies in the largest of the ACNC three size categories (‘Large’).

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.
  • You may therefore need to ask for more up-to-date information.

WHERE THE CHARITY OPERATES

Operating State(s)[iii]

• This list does not match the ‘Our National Contacts’ list on the Contact Us page.
• OM has a prominent call to give on its website.
  • It does not hold a fundraising licence in any of the seven that have a licencing regime.

CHARITY’S DOCUMENT (SIC)

• There is no Annual Report/Review available on the ACNC Register.
• I cannot find one on the website. A search says that they are ‘172 search results’, but then lists none.

RESPONSIBLE PERSONS

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

Rodney Hills                            4

Yi-An Neoh                               4

Vinod Sharma                          4

Edith Stephenson                    4

Jonathon Seeley                      2          (Alternative spelling: another 5)

Anthony Morgan                     6

Samantha Farmilo                   9

• The list on the website is missing Samantha Farmilo.
• Compared to the situation at 25 June 2015 (the Directors (sic) Report), Gary Thursby is no longer a director.
• What is the difference between ‘Board Member’ and ‘Director’ under ‘Position’?
• The Chair is not identified. 

(End of review of the ACNC Register information)

Latest financial report – detail

• The accounts show, other things being equal, a very low level of working capital: current liabilities exceed current assets by 450%.
  • And without any comment by the directors or auditor.
  • Further assessment is hampered by the lack of information about the borrowings.
• The accounts present an unclear picture about closely associated entities.
• The report includes, without explanation, an extra non-compliant financial report at the end.

Directors’ Report (page 1 of the Financial Report)

• No such report is required by the ACNC.
• Key Performance Measures: none are given.
• Seven directors, seven members. This is because the constitution provides that ‘The membership of a (sic) company shall comprise its directors. Upon ceasing to be a director, membership ceases [clause 2.1].

The Auditors Independence Declaration (page 5 (unnumbered) 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 Profit or Loss and Other Comprehensive Income (page 6 of the Financial Report)

• ‘Other comprehensive income’ is missing.
• Revenue $8.48 m (including Note 2)
  • The figures in the Note do not match those in the Statement.
  • ‘charitable income and fundraising’ $1.91 m
    • There is no breakup given, so it is not possible to relate this figure with the giving options on the website
      • ‘Give to Under Supported (sic) Staff’
        • ‘$10 a month to support the workers in our national office’
      • ‘Refugee Crisis Appeal’
        • To the Overseas Aid Fund; six options
      • ‘Other Projects and Appeals’
        • ‘Relief Development Justice’; six projects‘OM Australia’:
      • ‘OM Australia general donation’
      • ‘A Missionary’
        • Nine groups of individual missionaries
        • 14 in ‘Australia (HQ)’ (compared to 16 in ‘Australia (Field)’ 

Expenses: what was consumed

• $228K of grants were made [AIS 2014] – 10% of expenses – yet these are not disclosed here.
• Employee benefits expense $1.39
  • 60% of expenses.
  • Based on the number of employees shown in AIS 2014, and assuming that the part-timers averaged 50% of full-time, this figure represents an average annual benefit of $50K.
  • There is no explanation of the relationship between these expenses and the fact that OM calls for donations for the same staff.
• Other expenses $324
  • At 14% of expenses, this is well above what is normally considered acceptable to be ‘hidden’. What significant items are included in this figure?
• Administration expense $105
  • 5% of expenses
  • But what is included?
• Ministry and hospitality expense $$211
  • Excluding Other expenses, the second largest item.
  • Appears to be more a classification by function than by the nature of the expense like the others. This is contrary to AASB 101.
• Finance costs $63K
  • Why, if accrual accounting is being used, is this amount the same as the cash paid for both years?
• Fundraising expense $20K
  • 1% of expenses

Essential information to go with the figures – the Notes to the Financial Statements (page 10 of the Financial Report)

• The inclusion of the title (‘Notes to the…’) above many of the Notes is confusing – and unnecessary.
• NOTE 1: Summary of Significant Accounting Policies
  • Missing information:
    • Functional and presentation currency
    • Type of organisation
    • Individual entity?
  • The accounts were authorised for issue in April but not signed until June.
  • Since the directors have not said that they have the power to amend the financial statements after issue, we can assume that they don’t
  • a. Revenue
    • Over half the note is on grants yet none were received.
    • ‘Donations and bequests’ does not match the language in the statement.
    • No policy for ‘rental and interest income’.
  • c. Property, Plant and Equipment
    • No policy on derecognition.
    • The policies on ‘leasehold improvements’ and on ‘Leased plant and equipment’ are not relevant for these accounts.
    • There is no policy for motor vehicles.
  • (j) Critical accounting estimates and judgments
    • Estimating the useful lives of depreciable assets and calculating employee benefits don’t qualify here?
  • Missing policy Notes
    • New, revised or amending Accounting Standards and Interpretations adopted
    • Current and non-current classification
    • Trade and other receivables
    • Fair value measurement
• Note 8 Financial Assets
  • Why are shares worth $30K held when liabilities are relatively high?
• Note 15 Other Related Party Transactions
  • What about the relationship with the other OM charities (see Legal Name, (above)?
• Missing Notes
  • Contingent liabilities
  • Commitments

Where the directors put their name to the report – the Directors’ Declaration (page 21 of the Financial Report)

• Normally signed by two directors.

An independent opinion on the financial statements – the Independent Auditor’s Report…(page 22 (unnumbered) of the Financial Report)

• The auditor signed his report well before the directors. An unprofessional practice.
• The auditor says that the financial report is a special purpose report. He has the wrong company in mind.
• The reference should be to the ACNC legislation, not the Corporations Act.
• This is a ‘clean’ opinion.  Read here and here to draw the right conclusions from this.
• There is no need for the Basis of Accounting paragraph (most likely a consequence of thinking of the wrong company.)

Extra statements 1, 2 and 3: OM Training College Building Fund… (24^th to 26^th pages of the Financial Report)

• There is no explanation for why this statement, and the subsequent two, are included in the Financial Report.
• This report, and the subsequent two, should be clearly marked as being outside the scope of the audit report on OM.
• The financial report on this entity is missing most of the required statements.
• The audit report does not meet professional requirements.

Membership of accountability organisations claimed

• None claimed, including where its other memberships are listed. OM 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] There’s also a trading name the same as the legal name.

[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.