Archived: The Australian Navigators Ltd, charity review

This is a charity review, a review for those with an interest in the Australian charity The Australian Navigators Ltd (AN).

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 AN.

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 6 July 2016. Their response is incorporated below.

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 names (see Charity Details, below).
• AN website. And Facebook – although only a single post there.
• Not on YouTube, Twitter or LinkedIn.
• State government fundraising licence registers.
• No reviews of the Australian organisation on Glassdoor.

REGISTRATION DETAILS

• A Subtype that is consistent with sharing the Gospel.
• Which, according to the constitution, is AN’s only object:
  • The objects of the Company are to advance the Gospel of Jesus Christ in accordance with the Statement of Beliefs.

CHARITY DETAILS

Legal Name

• AN is a public company limited by guarantee.
  • Although such a company has members, in the case of AN membership is only open to a ‘staff member’ (someone holding a paid or unpaid staff position).
• It is not entitled to omit ‘Ltd/Limited’ at the end of its name.
  • Ministry comment: ‘The Board will consider this.’
• It is in ‘partnership’ with the other Navigators organisations around the world:
  • These organizational forms are “owned” by Navigators in that country, and while legally independent, are covenantally committed to the international leadership community of our Worldwide Partnership [Working Together In Our Worldwide Partnership]

Charity ABN

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

Charity Street Address

• The postal address, from the website: PO Box 6210 Baulkham Hills NSW 2153

ANNUAL REPORTING

• AIS 2015
  • This is AN’s compulsory Annual Information Statement 2015 (AIS 2015).
  • It gives basic financial information. If you think that this might be sufficient for you
    • Most of the Income Statement figures differ significantly from those in the Financial Report:
      • Ministry comment: ‘The Board will consider this.’
      • ‘Donations and bequests’ should be $1.41 m.
      • ‘Employee expenses should be $719K.
      • ‘Total expenses’ should be $$1.35 m.
      • ‘Net surplus/deficit’ should be $192K.
• Financial Report 2015
  • The accounts were signed four months after year end.
  • The Report was then lodged a week later, two months before the normal 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
  • See ‘Beliefs’, here.
  • Which match the Statement of Beliefs in the constitution.

Date Established

• There’s a brief history on the website.

Who the Charity Benefits

• Vision and Mission
  • These words come up many times in a search of the website, but there is no explicit vision or mission there.
    • Ministry comment: ‘We have an international vision that we are an element of.  You can view it here http://www.navigatorsworldwide.org/Public/About-Us/Our-International-Vision’
  • However, AN – along with all the other Navigators organisations – does have a ‘calling’:
    • To advance the Gospel of Jesus and His Kingdom into the nations through spiritual generations of labourers living and discipling among the lost.
• Activities (What did AN do?)
  • From the AIS 2015:
    • We raise up generations of disciples of Jesus Christ to advance the gospel. We are active in all areas of community including the student, business and military ministry.
      • This is identical to last year, so not a good response to the ACNC’s request for 2015’s activities.
      • A description of each of these areas is given on the website under the menu item ‘Ministries’.
      • Compare these activities to what your local evangelical church and its members are doing (or at least should be doing).
  • Here’s how ADFA describe what AN does there.
• Outcomes (What was delivered?)
  • Unfortunately, in the AIS 2015, in response to the request to describe activities and outcomes, there are only activities (see above).
  • There are no outcomes given on the website.
    • Ministry comment: ‘Read our stories in the Compass magazines that are on our website.  They are not listed as outcomes as what we do is hard to explain without sounding proud and claiming ‘we did this’ when we know it is God’s doing.  It is also hard to see as what we do, under God, is help people become more like Christ – we disciple people and help them grow in their understanding and application of the Scriptures.  These are subjective at best and unknowable at the heart level except for God.  We also have seen people come to faith – again God’s work, but He uses us.  It is well known in mission circles that conversions are often claimed on the barest evidence (they took a tract, they put up their hand).  Our impacts are in the stories people tell of how God changed them so read our newsletter, speak to our local leaders and the people God is impacting through them.  So yes, we don’t trumpet what God is doing through us in our annual report.’
• Impacts: (How were people’s lives improved?)
  • Nothing found.
    • Ministry comment: ‘Read our stories in the Compass magazines that are on our website.  See the answer above.’

Size of Charity

• With revenue of $1.54 m, AN comfortably exceeds the qualification for the top size of charity ($1 m).

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]

• AN doesn’t have a fundraising licence in either Vic or WA. Both have licensing regimes.
  • Ministry comment: ‘We are working on obtaining these’
• AN has a prominent call for donations on its website.
  • It doesn’t have a fundraising licence in the other two states that have a licensing regime.

Operates in (Countries)

• Assuming that neither Harry and Jennifer Burgess or Paul and Janae Denness work elsewhere overseas [Ministry comment: ‘they don’t’] this list matches the location of the overseas staff shown on the ‘Partner with Us’ page on the website.

CHARITY’S DOCUMENT (sic)

• An Annual Report/Review can be lodged on the ACNC Register, but AN hasn’t done this.
• Nor is there one on the website.

RESPONSIBLE PERSONS

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

Jeff Buckpitt                                    1

Grant Dibden                                  1

Taryn Donohue                               1

Janice Lai                                         1

Mark Morrison                               3

Russell Skeleton                             1

Michael Swan                                 2

Ian Watts                                         3

• This matches the directors listed on the website.
  • Whether the director is a member or an ‘Appointed Director’ is not disclosed.
• Under ‘Position’:
  • What is the distinction between ‘Board member’ and ‘Director’?
    • Ministry comment: ‘None’

(End of review of the ACNC Register information)

Latest financial report – detail^[3]

• The financial statements have been significantly recast from the ones published last year. There is no explanation for this.
• In many cases the figures in the 2014 column this year do not match those published last year.
• 43% of the expenses are included merely as ‘Other expenses’.
• The Statement of Profit or Loss… uses an outdated format.
• There is no explanation for why a ministry with a $1.54 m turnover would hold 100% of its $726K non-cash funds buffer – if that is what it is – in a moderate to high risk asset class.

Directors’ Report (page 1 of the Financial Report)

• No Directors’ Report is required by the ACNC.  Nor the constitution.
• Compared to good practice:
  • The ‘Principal activities’ are not specific to 2015.
  • Nor are the ‘Objectives’ or the ‘Strategies’.
  • Other than to describe them as ‘quantitative and qualitative benchmarks’, which is adds almost nothing to the term ‘performance measures’, the ‘key performance measures’ are not identified.
  • The ‘Information on Directors’ is
    • missing their qualifications
      • Ministry comment: ‘We think our experience that is listed is much more relevant than any degrees/qualifications we all have from many years ago.’
    • no Board officers are identified, and
    • Johnson’s resignation doesn’t match the declaration at the beginning of the report.
  • It is missing a ‘Contributions on winding up’ paragraph.
  • If Buckpitt and Johnson were directors up to the date of the report, why were they not eligible to attend all the year’s board meetings?
    • Ministry comment: ‘Johnson resigned on 1 Jun as stated and so wasn’t eligible for 3 meetings and Buckpitt came on to replace Johnson.  This could have been explained more clearly by us.’

Auditor’s Independence Declaration…(page 4 of the Financial Report)

• This is not required by the ACNC.
• Ministry comment: ‘The Board will consider the detailed comments on rest of the financial report and take it into account for our FY 15/16 report which we are currently preparing’

What was earned, what was consumed during the year – the Statement of Profit or Loss and Other Comprehensive Income (page 5 of the Financial Report)

• It’s in the title but no ‘Other comprehensive income’ section is included in the statement.
  • Which is strange, for it was there last year.
• The last section should not be included.
• Revenue $1.54 m (including Note 2)
  • Revenue should be classified ‘sales’ or ‘other’.
  • Revenue from main operations $1.46 m
    • What qualifies something as being part of the ‘main operations’? ‘Bookshop Sales’ $11K is included yet the earnings on a $726K portfolio are not.
  • Donations Received $1.41 m
    • This is 91% of revenue.
    • There is no breakup of this figure, so a match, even at the fundamental level of programs (7) versus staff, is not possible.
    • 25 individuals or couples seek money on the website.
      • There is no explanation of how this money will be used, nor its relationship to other income they may be receiving.
      • Four of these ‘partners’ are not in the staff list.
      • We are not told whether the money donated to a person (or couple) goes to AN to offset the benefits AN gives the person, or is just handed on to them.
    • In the staff list, there are 16 staff additional to the ones to whom we are invite to donate on the website. There is no explanation for why, when they appear to be doing the same work as those seeking donations, they don’t qualify for the Donate button.
  • Bookshop sales $11K and Conference Income $36K
    • Gross profit is not shown, and there is insufficient information to calculate it.
  • Freight Collected
    • This is a non-standard treatment of freight.
• Other revenue $83K
  • The last item should be ‘Other Other revenue’ to distinguish it from the heading.
  • Interest received $9K
    • How, if accrual accounting is used, is this amount (and that for last year) identical to the cash amount?
  • Investment Distributions Received $49K
    • Note the note. What about staff who fall on hard times? Don’t staff have to have their support raised before they start?
  • Unrealised Gain on Investments $5K
    • It appears that the investments are ‘Available-for-sale financial assets’, and their income should therefore not be included in revenue. It is part of ‘Other comprehensive income’ (a section that has been omitted).
  • Foreign currency Gain 8K
    • There is no explanation of this item, nor a policy note.
• Other income $5K (including Note 2)
  • There is no ‘other income’ item in Note 2.

Expenses

• This is a mixed classification of expenses.
• Neither fundraising nor administration expenses are disclosed.
• Nor is superannuation expense.
• Employee benefits expense $719K
  • The home page says 80 staff, the staff list shows 74.
  • This represents 47% of revenue.
  • In October 2015 AN reported in its AIS 2015 that it had 26 full time and 10 part-time employees. How do these figures relate to 26 individuals or couples who seek donations on the website?
  • Assuming that part-timers work 50% of full-time, and using the AIS figures, the expense represents only $23K per employee.
• Other expenses $580K
  • This means that for 43% of expenses there is no disclosure.

What’s left at the end of the year – Statement of Financial Position (page 6 of the Financial Report)

• Cash and cash equivalents $333K (including Note 4)
  • When combined with the portfolio of trusts (see Note 8), this represents seven and a half months of revenue.
  • There is no explanation for why $102K is kept in a US bank account.
• Trade and other receivables $6K (including Note 5)
  • There is no Note in Note 1 explaining the presence of a ‘Provision for impairment of debtors’ with a zero balance for both years.
• Inventories $16K (including Note 7)
  • The Accounting Standards require inventories to be valued at the lower of cost or net realisable value, not cost.
  • There is no policy Note (Note 1).
• Financial assets $726K (including Note 8)
  • This classification contravenes the Accounting Standards.
  • Why these units are held is not disclosed.
  • There is no explanation for why a ministry would hold 100% of its non-cash funds buffer – if that is what it is – in a moderate to high asset class.
  • There is no policy note (Note 1) explaining the accounting for this portfolio.
• Property, plant and equipment $5K (including Note 9)
  • ‘Plant and equipment’ is not helpful as a class of property, plant and equipment. Computers?
  • AN hasn’t had any leasehold improvements for at least the last three years.
• Trade and other payables $176K (including Note 10)
  • 90% of these liabilities are in one item, ‘Ministry Expense Account’, an item that is not typical, yet not explained.
    • There is also no explanation as to why it has doubled over last year.
  • The second section of the Note is not required, and adds little if anything.
• Provisions $5K (including Note 11)
  • Last year’s Financial Report showed $77K of non-current employee entitlements. Why does the 2014 column this year show zero?
    • And why is there no balance this year?
  • ‘Analysis of total provision’: The wrong year is shown.
  • ‘Employee Provision’
    • There is no ‘Provision for employee benefits’ in the financial statements.
    • There is no ‘non-current portion’ in the statements.
• Reserves $851K
  • Aren’t the second lot of funds, having been given by donors for a particular purpose, restricted funds?

How the wealth of the charity has changed – Statement of Changes in Equity (page 7 of the Financial Report)

• ‘Other comprehensive income’ is missing.
• The descriptor for the surplus is different to the one used in the profit or loss statement.

Where the cash came from and where it went to – the Statement of Cash Flows (page 8 of the Financial Report)

• Cash flow from operating activities
  • Receipts from customers $1.50 m: ‘Customers’?
  • Three of the six line items are unnecessary.
  • With the exception of the small amount of interest, the figures in the 2014 column, without explanation, do not agree with last year’s Report.
• Cash flow from investing activities
  • Two of the five line items are unnecessary.
  • The additions are incorrect in the 2014 column.
  • The total differs from last year.
• Cash flow from financial activities
  • None of the four line items are necessary.
• Net Increase/(Decrease) in Cash Held
  • The 2014 figure does not match what was published last year.
• Cash at Beginning of Year: ‘Cash’ should be ‘Cash and cash equivalents’.
• Cash at End of Year: ditto, plus the 2014 figure does not agree with last year’s accounts.

Essential information to go with the figures: Notes to Financial Statements (page 9 of the Financial Report)

• 1 Summary of Significant Accounting Policies
  • Basis of Preparation: the type of company and the function and presentation currency is missing.
  • Accounting Policies
    • (a) Revenue
      • No policy is included for conference income or investment income.
      • Ignore the first three paragraphs – AN hasn’t had any grants for at least the last three years.
      • Fourth paragraph: no services are sold – unless AN thinks that a conference ticket is a service.
    • (c) Property, Plant and Equipment: There are no leasehold improvements. (Nor have they had any for at least the last three years.)
    • (g) Employee Benefits: are there no contributions to defined contribution superannuation funds?
    • (l) Comparative Figures and (m) Economic dependence: voluntary disclosures.
  • Missing policy Notes:
    • New and revised Standards
    • Current and non-current classification
    • Trade and other receivables
    • Trade and other payables
    • Fair value measurement
• 13 Operating Lease Commitments
  • The declaration of no lease commitments does not match, without explanation, the fact that there is an expense ‘Rental expense on operating leases’.
• 14 Member’s (sic) Capital
  • There is no capital.
  • The total liability is not disclosed, nor is it calculable.
• 15 Related Party Transactions
  • (i) Key management Personnel
    • There is no explanation for the substantial increase in the remuneration disclosed.
    • Who are the ‘Other related parties’?
    • The usual disclosure of transactions, receivables and loans is missing.
  • (ii) Other related parties
• 16 Financial Risk Management
  • A voluntary disclosure.
• Missing Notes
  • Commitments (even if there aren’t any)
  • Contingent liabilities (ditto)

An independent opinion on the financial statements: Independent Auditors (sic) Report… (page 22 of the Financial Report)

• This is a ‘clean’ opinion. Read here and here to draw the right conclusions from this.
• It appears that the auditor has rushed the conversion of last year’s report to this year’s: it is no longer true that the Financial Report is a special purpose financial report, and the ‘Basis of Accounting’ paragraph is no longer relevant.
• He’s also rushed the signing – it should happen after the directors sign, not before.

Membership of accountability organisations claimed

• Missions Interlink (bottom right here). Confirmed (but with a slightly incorrect name).

(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. ↑