Archived: Overseas Council Australia, charity review

This is a charity review, a review for those with an interest in the Australian charity Overseas Council Australia (OCA).

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 OCA.

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 16 May 2016, and invited them to comment. They provided the following comment for publication:

(We) are committed to continually improving our systems and reporting.

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.
• OCA website.
• Facebook.  The few videos on Vimeo.com.
• Not on LinkedIn.
• State government fundraising licence registers.
• No reviews of the Australian organisation on Glassdoor.

REGISTRATION DETAILS

Entity Subtype

• A subtype consistent with sharing the Gospel.
  • If the Note under the subtype is not an ACNC mistake, then this selection by OCA has been overdue since 30 June 2015.
• The ‘principal objects’ in the constitution are not particularly supportive of this subtype: ‘religion’ is mentioned only in the last of four objects, and then only equally with academia, business or society as areas in which to lead. And no mention of Christianity anywhere.

CHARITY DETAILS

Legal Name

• OCA is a company limited by guarantee.
• It is entitled to omit ‘Ltd/Limited’ from its name.
• The same people who are responsible for OCA (Responsible Persons, below) are also responsible for another charity, The Trustee for (sic) Overseas Council Fund.
  • OCA have, without explanation in the Financial Report (see below), chosen not to consolidate the two entities. Nor have they taken advantage of the ACNC’s group reporting provisions.
  • If you want a complete picture of what happens at 22-24 Pitt Street therefore, you will have to look at both Register entries.
  • Because the Fund is a ‘Small’ charity, the information in their AIS 2015 will have to suffice.
  • There is no mention of the Fund on the website.

Other Name(s)

• There’s a trading name missing here, but it’s identical to the legal name (a consequence of converting from an association?). (Anyway, it’s business names that are important, not trading names.)

Charity ABN

• Tax deductibility: No, you cannot claim a tax deduction for a donation to OCA.
• This is contradicted by information in the Directors’ Report:
  • Through the year we began a relationship with World Relief Australia which allows us to gain tax deductibility for a few new projects. While OCA’s focus is on supporting theological and leadership education, and not relief, from time to time our partner Bible colleges, as part of their core ministries run relief and development projects. This gives our donors extra opportunities to support the work of OCA in a tax effective way. We currently have five projects that are tax-deductible out of the dozens of projects and hundreds of students that we support.
  • What about their own ability to give deductibility through their Fund?

Charity Street Address

• No postal address on the website.

Email

• I have no reason to believe that this doesn’t work.
• An alternative, from the website: office@overseascouncil.com.au

Phone

• From the website: Phone 1300 88 9593

Website

• From the Google search: www.overseascouncil.com.au.

ANNUAL REPORTING

• AIS 2015
  • This is OCA’s compulsory Annual Information Statement 2015 (AIS 2015).
  • If you think that this may be sufficient for you
    • ‘Other Income’ includes $27K of interest, not normally included here.
    • With no ‘Grants and donations…in Australia’, ‘Grants and donations…outside Australia’ does not match the $1.31 m in the Income Statement.
    • ‘Total expenses’ are understated. They should be $1.83 m.
    • The deficit is higher at $100K.
• Financial Report 2015
  • The Report was signed four months after year end.
  • It was then another three months before it was lodged, one day before the (extended) final date.
  • The Fund’s AIS was lodged two months after that, nine months after year end.
  • 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
  • Not in the constitution.

Date Established

• Here’s the founder’s story.

Who the Charity Benefits

• Vision
  • No conventional vision found, but here’s what they call their ‘big picture vision’.
  • Here’s their ‘strategy behind OCA’
• Mission
  • None found.
• Activities (What did OCA do?)
  • In the AIS 2015:
    • Raising funds to send to bible colleges in developing countries to train leaders.
      • Not particular to 2015.
  • The few words in the AIS is not due to disclosure reluctance. Here’s what they said in the Directors’ Report:
    • OCA’s income continues to be derived primarily from donations towards projects and sponsorships at key Bible colleges in the developing world. Whilst income derived from donations fell by 9%, total cash donations remained relatively unchanged at around $1.7 million. The difference was the result of a one-off in-kind donation of the Tahlee Ministries’ Library in the previous year. This library was used to expand seven Bible college libraries in Papua New Guinea linked to Christian Leaders’ Training College (CLTC). Over the past two years, Management has taken steps to reduce our expenses on wages and other costs, these falling approximately 20% over the period. We are especially grateful for the volunteer staff who have joined the team this year and in doing so, have allowed us to continue to service our donors and ultimately the work of our partner colleges. Key highlights of the year past include:

A total of $1,305,823 was distributed to partner colleges in the year;

We supported over 210 Bible college students in various colleges;

26 faculty members were supported to do masters and doctorates in the developing world;

We completed the following major projects in the year: Annual funding for the Peking University Christian Studies program and the Shenzhou Bible Commentary series; the first full time Master of Theology cohort at CLTC completed their studies doubling the number of Melanesians with that degree in the country; several projects at Arab Baptist Theological Seminary and at Allahabad Bible Seminary in association with our speakers’ programs; the initial funding for the Kalaymyo Consortium of Bible Colleges in Myanmar; and the first cohort for the MA in Aid and Development in Asia.

As part of our strategic impact we have expanded our support to include a number of regional and global projects in the past year. These have been done in cooperation with other like-minded organisations, particularly our USA affiliate. We continue to expand the work we are doing in the Pacific region through our Pasifika Strategy focussing on the training of Bible college faculty members. We have led a global project with eleven key Bible colleges to research their contexts with a view to changing their curriculum to better suit the context. These eleven colleges will present at an international conference and also take part in regional conferences in the coming year to disseminate their learnings.

Through the year we began a relationship with World Relief Australia which allows us to gain tax deductibility for a few new projects. While OCA’s focus is on supporting theological and leadership education, and not relief, from time to time our partner Bible colleges, as part of their core ministries run relief and development projects. This gives our donors extra opportunities to support the work of OCA in a tax effective way. We currently have five projects that are tax-deductible out of the dozens of projects and hundreds of students that we support.

We hosted two international speakers in the year, Dr John Mathew from Allahabad Bible Seminary in India and Rev Ashkenaz Asif from Zarephath Bible Seminary in Pakistan.

• Outcomes (What did OCA deliver?)
  • OCA did not respond to the request in the AIS 2015 for a description of its outcomes.
  • See Activities, above.
• Impact (How were people’s lives improved?)
  • Nothing systematic found.

Size of Charity

• OCA is well over the threshold for ‘Large’, the largest size. (The Overseas Council Fund is ‘Small’.)

Financial Year End

• This means that the next financial report is due by 31 December 2016 – or 31 January if the ACNC is generous again. 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)[i]

• ‘Meet the Team’ explains why NSW, Vic and WA are in the list, but why the others?
• OCA has a fundraising licence in its home state, not the other two states in which it is represented, nor in the other four in this list that have a licensing regime.
• OCA has a ‘Donate Now’ button at the top of each webpage.
  • Apart from exemptions, whether it needs a fundraising licence depends on whether the other six states think that OCA, by calling for donations publicly, is ‘fundraising’ in their territory.

Operates in (Countries)

• Are these the countries to which money is sent?
• It’s a few more than the bible colleges shown on their map.

CHARITY’S DOCUMENT (SIC)

• An Annual Report/Review can be lodged on the ACNC Register, but OCA hasn’t done this.
• A search of the website says that there is an annual report under ‘Publications’. However, the link is dead.
• The Trust Deed lodged by the Fund is a single blank sheet.

RESPONSIBLE PERSONS

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

John Allison            This function was not working at the time of publication

John Anderson

David Brown

Kenneth Chapman

Timothy Clemens

Alan Jeffrey Hall

Stephen Kerr

• Not on the Register, or the website, but Philip Twyman says that he is, and has been since 2003, a director OCA.
• Brief biographies of all bar Clemens, but with the addition of Colin Adam and Malcolm Wood, are on the website.
• The same people are the responsible persons for the Fund.

(End of review of the ACNC Register information)

Latest financial report – detail[iii]

• There is no mention of the fact that OCA is the trustee of the Overseas Council Fund, let alone an explanation for why the two charities are not consolidated or reporting as an ACNC group.
• OCA says that it uses the cash basis of accounting, but this doesn’t fit with the statements produced. Plus its illegal for this size charity anyway.
• The directors have adopted, without explanation, the lower standard special purpose financial statements.

The Directors’ Report (page 1 of the Financial Report)

• This report is not required by the ACNC.
• Missing sections: ‘Performance measures’, ‘Information on directors’, and ‘Company Secretary’.
• Twyman is missing from ‘Directors’.
• ‘Operating Results’ and ‘Review of Operations’ are not required.
• ‘Objectives and Strategies’ is mostly about mission and method, not short-term and long-term objectives.

Where the auditor says that he or she was independent of the charity – the Auditors (sic) Independence Declaration – page 3 of the Financial Report

• This is not required by the ACNC.

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

• Cash $824K, including Note 2: The correct term is ‘Cash and cash equivalents’
• Fixed Assets $37K, including Note 3
  • ‘Fixed assets’ is an antiquated term.
  • These need to be divided into classes.
  • The usual reconciliations to written down value are missing.
• Payables $885K, including Note 4
  • Project Balances Owing $857K: are these really a present obligation, i.e, a liability?
  • Motor Vehicle financing $27K: what kind of financing? A lease?
• Administrative Reserves:
  • This heading doesn’t match the content.
  • A surplus is normally transferred to a Retained Earnings or similar account and then distributed.

An extra statement – the Detailed Income Statement – page 6 of the Financial Report

• No reason is given for including this statement.
• It is not included in the audit.
• The heading on the second ‘Account’ is different to the description on the bottom line.
• The ‘Surplus/Deficit’ amount at the end does not match that shown in the ‘official’ income statement.

What was earned, what was consumed during the year – the Income Statement (page 7 of the Financial Report)

• The format is years out-of-date: there is no ‘Other comprehensive income’ section.
• ‘Income’ should be ‘Revenue’.
• Operating Revenues, $1.70 m, including Note 6
  • ‘Operating’ versus ‘non-operating’ is no longer a valid distinction.
  • The Note says that this revenue is all from donors.
  • Provisions for employee entitlements:
    • Why is this item negative?
    • ‘Provisions’ are not an expense.
• Personnel costs $320K
  • This is 18% of expenses.
  • With three full-time and 2 part-time employees, and assuming part-timers work 50%, this amount represents $80K per employee.
    • The Fund’s AIS 2015 says that its workforce is identical, but with only $77K in total, is this a mistake?
• Administration $201K
  • This is 11% of expenses.
• Payments and in kind allocations to Projects $1.31 m, including Note 4
  • Note 4 does not explain this item.
  • What is the accounting involved for in kind allocations?

Where the cash came from and where it went – the Statement of Cashflows (sic) (page 8 of the Financial Report)

• Donations and sponsorships $1.69m: why, if the cash basis of accounting is being used, are these figures different from those in the Income Statement?
• Why is ‘Increase/(Decrease) in Other Payables included in Investing Activities rather than ‘operating activities’?
• Is that the correct accounting treatment for those ‘Prior period adjustments’?

Essential information to go with the figures – the Notes to and Forming Part of the Accounts (page 9 of the Financial Report)

• Note 1   Summary of Significant Accounting Policies
  • No explanation is given for the choice of the lower standard special purpose financial statements.
    • Is it really the case that all those currently involved with OCA – a charity with a $1.73 m turnover, representatives in three states, and a public request for help – and all those who might become involved as a result of OCA’s promotions and website, can get a financial report tailored to their particular needs? (This is the implication of not producing general purpose financial statements.)
  • What has the other Accounting Standard specified by the ACNC, AASB 1054, not been followed?
  • AASB 1 was not applicable, so there was no question of applying it.
  • Disclosures missing:
    • Registered office and principal place of business.
    • Functional and presentation currency.
    • The date the accounts were authorised for issue.
  • (a) Basis of Accounting
    • It is not legal for OCA to use the cash basis.
  • (c) Furniture, Equipment and Vehicles
    • The Balance sheet uses a different term.
    • But both are incorrect – it should be ‘Property, plant and equipment’.
    • There are a number of other disclosures required here.
  • (d) Employee Entitlements
    • Accruing leave is not consistent with the cash basis.
    • The method of measurement has been omitted.
  • (f) Status: That it is a not-for-profit also needs to be disclosed.
  • Missing policy Notes:
    • Revenue recognition
    • New, revised or amending Accounting Standards and Interpretations adopted
    • Current and non-current classification
    • Cash and cash equivalents
    • Trade and other receivables
    • Trade and other payables
    • Impairment of non-financial assets
    • Goods and services (GST) and similar taxes
    • New Accounting Standards and Interpretations not yet mandatory or early adopted
  • Note 7 Segment Reporting
    • This is not required by the standards adopted.
    • The content should be under ‘Status’, above.
• Missing Notes:
  • Critical accounting judgements, estimates and assumptions
  • Contingent liabilities
  • Commitments
  • Events after reporting date

An independent opinion on the financial statements – the Independent Audit Report (page 12, unnumbered, of the Financial Report)

• This report is a ‘clean’ opinion (read here and here to draw the right conclusions from this). However,
  • The auditor, Lawrence R Green of Shedden & Green Partners, does not state that the financial report is a special purpose report.
  • He allows an extra statement to be included without explanation.
  • The ‘Opinion’ incorrectly says that the financial report complies with Australian Accounting Standards – Reduced Disclosure Requirements.
  • He implies that fundraising appeals were conducted, but OCA didn’t conduct any.

Membership of accountability organisations claimed

• None claimed on the website.
• However, OCA is a member of Missions Interlink.

(End of review)

[i] 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.’

[ii] 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.

[iii] 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.