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This is a review, for donors, of the Australian charity Prison Fellowship Australia (PFA).
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 giving decision.
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.
Prior to publishing this review, I sent my observations to the charity, on 30 October 2015, and invited them to comment. On 8 November 2015 the Board, via the Secretary, replied by letter:
We acknowledge your recent correspondence dated 30 October. The Board is satisfied with the adequacy of its existing audit procedures and of the current reporting obligations to the ACNC. Although incomplete, your preliminary observations will be referred to the Board’s Finance and Audit Committee for consideration in future reviews and recommend action on any items that are considered relevant.
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:
- For each heading in the register entry, first read the information under that heading.
- 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.
- ACNC Register (including links)
- Google search on the charity’s names (see Charity Details, below).
- PFA website. PFA social media sites, at the bottom here, and PFA Victoria on Facebook. Plus PFA on LinkedIn.
- State government fundraising licence registers.
- The first of these is a type consistent with sharing the Gospel.
- The company’s objects cannot be checked because when PFA submitted their governing document they omitted to include their Memorandum of Association.
- Not to be confused with another charity, Prison Fellowship of Australia Inc WA. From their AIS 2013, this appears to be PFA’s Western Australian branch. However, from the WA register of associations the organisation is no longer registered, which most likely explains why much of the information that should be on the ACNC Register is missing.
- There is no mention of this charity in the PFA material.
- PFA is a public company, a company limited by guarantee.
- It is permitted to omit ‘Ltd’ on the end of its name.
- Their two business names – The Way Mentoring Project and Heavenly Tarts – should be listed here.
- The third, Wornout Boutique, although listed on the company’s ABN record, is, according to ASIC, deregistered.
- There are a number of other names that PFA uses for its programs. None are registered. Whether or not they should be depends on whether they are ‘carrying on business’ under the name. And
Generally, if you are entitled to an ABN based upon the nature of your activities…you will be carrying on a business for the purposes of the Business Names Registration Act[ii].
- PFA, according to its Annual Report (see Charity’s Document (sic), below), has three shops, Second Chances Furniture and Second Chances Op Shop in SA, and Op Shop in Victoria.
- None are registered business names.
- Only the Victorian one is included under PFA’s ‘Social enterprises’ on their website.
- Perhaps this is because the two in SA are not owned by PFA, but by a SA incorporated association, Second Chances SA Inc.
- This association owns the name Second Chances Op Shop, but neither of the names under which it is trading.
- Neither website suggests any formal connection between the two organisations.
- PFA’s description, in the Annual Report, of the SA shops as their shops implies that the association is controlled by it. Even though the association existed only for the last two weeks of the PFA year, the relationship should be disclosed, and consolidated financial statements at least mentioned.
- Tax deductibility: You can claim a tax deduction for a donation to PFA. (And for Second Chances SA Inc.)
Charity Street Address
- The postal address, from the website, is PO Box 525, Toongabbie, NSW 2146.
- AIS 2014
- This is PFA’s compulsory Annual Information Statement 2014 (AIS 2014).
- It gives basic financial information.
- If you think that this is sufficient for you then you should note that
- Because they are not shown in the audited statements, it is not possible to verify ‘Donations and bequests’, Employee expenses’, ‘Interest’, and ‘Grant…for use in Australia’.
- Financial Report 2014
- The report was signed three and a half months after the year end.
- It was then lodged over two months after that.
- The coverage of finances in this review is left until the financial report proper (Latest financial report – detail, below).
ABOUT THE CHARITY
Who the Charity Benefits
- Statement of Faith
- There isn’t one on the website.
- From the Articles of Association, we know that there is one in the Memorandum of Association, but this document has been omitted when lodging the governing document with the ACNC.
- Less common for this day and age is the provision in the Articles that the original members had to accept this Statement of Faith.
- However, there is no explicit requirement that applicants since then have to do the same.
To share the gospel of Jesus Christ with prisoners and their families.
Our vision is for all those who have been involved in or affected by crime to know the redemptive power and transforming love that is revealed in the gospel of Jesus Christ, to be reconciled with God and others, and to experience lasting transformation.
- This does not match the vision given in the AIS 2014 : “The vision of PFA is to be the most effective national prison ministry.”
- The Annual Report – see Charity’s Document (sic), below – tells us that the vision, mission and values were changed in 2013-14, so perhaps this is the old one.
- The vision on the website also doesn’t match the NSW/ACT branch’s vision:
To be a reconciling community of restoration for all those involved in and affected by crime, thereby proclaiming and demonstrating the redemptive power and transforming love of Jesus Christ for all people.
- Nor that of the Northern Territory branch.
- The other four branches don’t have an explicit vision.
To build relationships with those who do not know Jesus Christ, so that we can share His gospel with them, and to disciple those who know Him.
We do so for prisoners, ex-prisoners, their families and others affected by crime.
We work within society and with governments, to maintain a fair and just criminal justice system and to promote the principles and practice of restorative justice.
We encourage and assist Christian churches and other Christian organisations to participate as partners in our ministry.
- Note: Donors can still get a tax deduction even though PFA is all about sharing the gospel.
- This mission doesn’t match that of the NSW/ACT branch:
To exhort and serve the Body of Christ in prisons and in the community in its ministry to inmates, ex-inmates, victims and their families; and in its advancement of biblical standards of justice in the criminal justice system.
- Nor that of Tasmania: “Transforming the lives of inmates and their families through the Gospel of Jesus Christ.”
- SA has the same mission as the one on the website, while the other four states don’t have an explicit mission
- Activities (What did PFA do?)
- From Description of charity’s activities and outcomes in the AIS 2014:
The impact in each PFA State has varied according to the opportunities presented and the volunteers available. These avenues include, personal mentoring, in-prison life skill programs and spiritual ministry through chapel and Bible Study. As a Public Benevolent Institution the work of PFA has included support for families and children’s camps. Angel Tree has provided Christmas presents for the children of prisoners. For prisoners we provide post-release support including accommodation, visitation, and employment. PFA is a national volunteer movement with over 1,300 volunteers with some paid leadership in each State. The vision of PFA is to be the most effective national prison ministry.
- More detailed information is available from the State sites.
- Outcomes (What did PFA deliver?)
- Unfortunately in the AIS 2014, in response to the request to describe activities and outcomes, there are only activities (see above).
- However, the results for five measures are given in the Directors’ Report (see below):
Art from Inside artwork 205
Prisoner’s children on Camp for Kids 285
No. of Sycamore Tree Projects held 11
Angel Tree gifts 7,743
Active volunteers 1,300
- Impact (How were people’s lives improved?)
- There are a few anecdotal accounts in the Annual Report, but nothing systematic either there or on the website.
Financial Year End
- This means that the next financial report is due by 31 July 2016. Before that the financial information on the Register will be up to 18 months out-of-date.
WHERE THE CHARITY OPERATES
- Even though PFA is active in all states, and each of those states calls for donations on their website, it doesn’t have a licence to fundraise in four of the seven states where one might be required[v].
Size of Charity
- With a revenue of $2.0 m, PFA 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.
- But it is available on the PFA website – half way down here.
Peter Hall 13
Daryl Myatt 1
Vera Ou-Young 1
David Shaw 10
Michael Wood 6
John Peberdy 11
Steven Nicholson 1
Timothy Minahan 1
David Cormack 1
- The website lists the board members at the bottom here.
- The Articles of Association require one Deputy Chair, not two.
- Comparing the website listing to the Register, the Secretary, Finance Officer and another Deputy Chair should be identified on the Register under ‘Position’.
- Each of the seven State Councils is required by the Articles of Association to prepare a balance sheet and profit and loss statement for presentation to their AGM. We are not told the relationship between those financial statements and the ones prepared by PFA.
(End of review of the ACNC Register information)
Latest financial report – detail
Directors’ Report (page 1 of the Financial Report)
- No such report is required by the ACNC.
- The listing of responsibilities is incomplete here; use the website instead.
Auditor’s Independence Declaration…(page 6 of the Financial Report)
- There is no requirement for this declaration.
What was earned, what was consumed during the year – the Statement of Profit or Loss and Other Comprehensive Income (page 7 of the Financial Report)
- Revenue $2.03 m (including Note 2)
- Both donations and bequests are sought on the website. The amount received is not disclosed.
- From the AIS 2014 they totalled $1.10 m.
- With the government grants of $406K, this leaves 26% undisclosed.
- Both donations and bequests are sought on the website. The amount received is not disclosed.
- Expenses (including Note 2)
- Administration expense, $484K, is 24% of revenue.
- There is no explanation of how expenses are classified between ‘administration’ and ‘service provision’.
- The following expenses are not disclosed:
- fundraising expenses
- superannuation expense
- cost of sales
- It is employee expenses that should be shown, not ‘Employee provisions’.
- From the AIS 2014, they were $987K.
- Based on the number of employees shown in their AIS 2014, and assuming that all 12 part-time employees work 2/3rds time, this represents an average expense per employee of $82K.
- Presumably the audit fee is comparatively high due to the need to audit the branches?
- Rental expense is for offices?
- Why the 50% increase?
What’s left at the end of the year – the Statement of Financial Position (page 8 of the Financial Report
- Cash on hand $607K (including Note 3)
- ‘Notes and coin’ is the more usual definition of ‘cash on hand’.
- This should be ‘Cash and cash equivalents’.
- According to the governing document, State Councils have their own bank accounts. Presumably they are included in this figure.
- State Councils are required to invest bequests made by ‘persons living within the state’, within that state. However there are no investments in the PFA accounts.
- Accounts Receivable and other debtors $25K (including Note 4)
- What is sold on credit?
- Are any of these amounts of doubtful collectability?
- Inventories on hand $8K (including Note 5)
- Why are these not valued at net realisable value?
- Plant and equipment $105K (including Note 7)
- There is no reconciliation of written down values.
Essential information to go with the figures – the Notes to the Financial Statements – page 11 of the financial report
Note 1: Statement of Significant Accounting Policies
- The directors say the company is ‘not a reporting entity’ because ‘there are no users dependent on general purpose financial statements’.
- 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.
- 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.
- Missing Notes:
- Fair value measurement
- Contingent liabilities
- Incomplete Notes
- Critical accounting judgments and estimates
- Estimation of useful life?
- Employee benefits?
- Non-current assets: a reconciliation
- Critical accounting judgments and estimates
An independent opinion on the financial statements – the Independent Auditor’s Report (the last two pages of the Financial Report)
Membership of accountability organisations claimed
- None claimed.
- The US organisation is a Charter Member of the Evangelical Council for Financial Accountability (ECFA).
- The International Organisation is a Member of the ECFA.
(End of review)
[i] Australian Charities and Not-for-profits Commission, Australia’s national regulator of charities.
[ii] ASIC Regulatory Guide 235, www.asic.gov.au
[iii] Timothy mentions both organisations in his LinkedIn profile, Lynn doesn’t.
[iv] 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.’
[v] A licence is held in Queensland, but it is in the name of the Queensland Council of PFA.
[vi] 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.