There is a later review.
This is an updated review of the organisation ‘Vision Church’ (Vision), principally for those who are existing donors, or who are considering donating. The website has an invitation to help fund their new church building (towards the bottom here).
The Board’s comments have been included below. Where there is no heading Vision comment, the Board chose not to comment. It is reasonable to assume that, in these cases, our comment was accurate.
The ACNC, in their article, Donating to Legitimate Charities, gives “some things to consider to help you make sure your donation is going where it is intended”:
- Check the charity’s name.
- Ask for identification from anyone seeking a donation.
- Be careful of online requests for donations.
- No tax deduction doesn’t mean the charity is not a legitimate one, and
- Find out more about how the charity says it uses donations.
A search on the ACNC Register for ‘Vision Church’ gives 17 charities. None are in the ACT. All churches should be registered as charities if they want exemption from income tax, so why not Vision? The answer comes via the statement on Vision’s home page that the church was ‘formerly Vision Christian Fellowship’: a search of the Register using this name brings up a registered charity in the name Vision Christian Fellowship Inc.
Vision is still Vision Christian Fellowship Inc – it’s just that it has decided to operate under a different name, Vision Church.
(The search of the Register failed because Vision has failed to record ‘Vision Church’ as a name by which it is ‘Also known as’.)
It would be unusual for a church to use either door-to-door or street collectors, and there is nothing to indicate that Vision does.
It would be unusual for a church to be entitled to receive tax deductible gifts, and indeed Vision isn’t [‘Will my donation be tax deductible?’, Vision’s Register entry].
Here’s how Vision describes itself:
Only two of these activities, ‘Children’ and ‘Youth and Young Adults’, are listed on the Register as ‘Charity programs’.
From the Annual Information Statement (AIS) 2020 [the Register], here is what they said they did in 2019-20: A fuller description of what happened last year is given in the ‘Annual Report’.
Sharing the Gospel?
Vision operates in Australia, per the Register, only in the ACT (at 1 Lithgow Street, Fyshwick).
The omission of NSW this year implies that they are no longer running the ‘Scripture in schools’ program in NSW that they were running last year [last year’s review]. (And, given the absence of this program under ‘Charity programs’ on the Register, maybe no longer in the ACT too.)
How activities translated into dollars spent
The audited account of how donations are used is the Financial Report 2020 on the ACNC Register.
This Report shows that the Board of Vision has continued with two significant decisions that reduce their accountability for the use of money given by donors:
- They produced the lower-standard financial statements (called ‘special purpose’).
- They decided that it was OK to accept an audit opinion that gave less than an unqualified audit ‘tick’ to the financial statements.
“Whilst Ted is correct that both of these decision have been maintained, it is strong conviction of the Board that,the controls and accountability of all Vision financial reporting and integrity is at all times equal, and often significantly above, that which is required, and that which could be considered ‘industry standard’, when compared with other organisations of our size and nature. Specific reasoning behind these two decisions are discussed below.”
The type of financial statements
This is the reason given by the Board for choosing special purpose statements, and thus being able to report less in those statements than they would otherwise have had to:
‘Users’ are all the people and organisations who have any interest (or might have an interest in the future), financial or otherwise, in Vision. It includes prospective users.
With an organisation of the size and complexity of Vision, it stretches credulity to conclude that all these users can ring the Vision office and ‘command the preparation of (financial) reports tailored so as to satisfy specifically all of their information needs’.
If you, a user, can’t do this, then you are the kind of user who is dependent on the other kind of statements, ‘general purpose’:
‘A financial report intended to meet the information needs common to users who are unable to command the preparation of reports tailored so as to satisfy, specifically, all of their information needs.’ [Glossary, aasb.gov.au].
Unlike special purpose reports, general purpose reports must comply with all the Australian Accounting Standards. More will be reported by the charity as a result – greater accountability and transparency.
The auditor, Bhaumik Bumia CA of Hardwickes, agreed with the Board’s choice. This is a highly questionable decision, both because of the argument given above and this opinion of his professional body:
“In the Boards opinion this is not at all a questionable decision and rather it is the ‘common practice’ and ‘common sense’ decision made by organisations of our size and nature.”
- Vision offer no support for their claim that it is ‘common practice’.
- Common practice doesn’t necessarily mean it is correct practice.
“This course of action not only meets all relevant legislation”
It only ‘meets all relevant legislation’ if the correct type of statements were chosen. The evidence given in the review casts considerable doubt on that decision.
“but also provides more than sufficient information and accountability for any exisiting or prospective users.”
It is only sufficient, as least by secular standards, if the statements present a ‘true and fair view’. And this is only possible if the correct type of statements were chosen.
“Whilst we appreciate Ted’s concern with hypothetical ‘users’ that might require additional information, such users have never presented in reality, and it is doubtful that they would in fact ever exist.”
- The users exist. The law lists them – see footnote vii. It is just a question of whether it is reasonable for the Board to say that these users are able to ‘command the preparation of (financial) reports tailored so as to satisfy specifically all of their information needs’.
- We presume that ‘presented in reality’ means contacted Vision. And that this is their measure of whether there is any demand for their reports. The problem with this measure is that Vision’s financial statements have been readily accessible by the public without contacting Vision for at least the last seven years, and Vision would not know whether anybody had taken advantage of this.
“Thus it would seem incredibly poor stewardship of resources to invest significant cost and effort in producing something that is arguably of no additional benefit.”
- Whether or not they would be of ‘additional benefit’ is not the criterion in the law.
- Vision give no evidence to support their claim that there would be ‘significant cost and effort’ in making the change.
A qualified audit report
Here’s the auditor’s explanation for his qualification:
What this means is that the auditor could give no assurance that the offerings recorded in the books of account were all the offerings given.
The Board does not explain their reasoning behind concluding that putting the necessary internal controls was ‘not practicable’.
Whether or not this decision is ‘common’ as the auditor says, is an empirical question. But whatever the answer, just because something is ‘common’ doesn’t make it right. There are numerous guides available to show churches how to avoid such a qualification. Here is the one by the Auditing and Assurance Standards Board that we referred Vision to last year:
And there is no shortage of examples of churches who have not received an audit qualification, and therefore, by implication, have sufficient controls to satisfy their auditor. Here are three Canberra examples that had, like Vision, revenue greater than $1 million:
Last year Vision’s size was one size smaller, ‘Medium’. There were a number of ‘Medium’ churches in our sample who avoided the qualification. They include The Old Apostolic Church (Australia), even though the auditor, Eric Hummer, was the same auditor who qualified Vision’s accounts last year.
If the directors of these churches can do it, why can’t the Board of Vision?”
“As noted by our Auditors:
“As in common for entities of this type, it is not practicable for Vision Christian Fellowship to maintain an effective system of internal control over cash revenue received from offertories until their initial entry in the accounting records. Accordingly, our audit in relation to these revenues was limited to amounts recorded.” In other words this is a common qualification given to entities of our type.”
- As we say in the review, even if it is common that doesn’t make it right.
- After reviewing many churches who take offerings, we can tell you that the majority are able to avoid the qualification.
- Note that Vision, after being presented with the information that would most likely allow them to avoid an audit qualification, both last year and this year, chose to accept such a ‘black mark’ on their report.
“Whilst we can-not comment on the specifics of any arrangements that other entities have with their auditors to avoid such a qualification”,
Some simple enquiries will reveal these arrangements. And then it is very likely that a ‘clean’ audit would result.
“we do note that this qualification is very common place in similar churches for example: The Anglican Parish of Wanniassa (https://www.acnc.gov.au/charity/33eebf228c0c7874a8e12d868f1997fb#financials-documents)”.
- One example does not support the Vision claim that the audit qualification is ‘very common place’. (And even if it were common, why should what is common be the standard rather than what is right?)Even if it were common, why, especially for an evangelical church, should what is common be the standard of practice rather than what is right?
- We invite you to compare their assertion of ‘common’, supported by just one example, with (a) our experience over the last six years reviewing churches, and (b) the evidence given above.
There are several other issues with the Financial Report 2020:
- The Board continues to classify ‘Building fund contributions’ incorrectly. They are not ‘Other income’, but revenue. Both ‘offerings’ and revenue are therefore understated by $453K.
“It has always been the Boards intention to separately classify offerings and building fund giving. In the Boards opinion it would be incorrect not to seperatly classify these amounts”
- Like last year, Vision has misunderstood what we are saying: we did not question the separation of offerings and building fund giving, only the exclusion of the latter from revenue.
- Correctly classifying the building fund giving, as revenue rather than ‘Other income’, in no way stops Vision showing offerings and building fund giving as separate line items. And thereby not understating revenue.
- The Board doesn’t explain the increase in ‘Work in progress – Building’ from $4K to $427K. (Information outside the audited accounts cannot make up for a lack of information in those accounts.)
“This relates to the Building refurbishment which should be self explanatory.“
- There is no explanation for the 267% increase in the surplus for the year (incorrectly called ‘profit’).
“EOY surpluses always vary widely from year to year, such is the nature of an entity such as ours which is dependant purely upon the generosity and giving of its members.”
- Here are the last eight years’ surplus (deficit):
- Even if you agree with Vision that this shows figures that vary ‘widely from year to year’, it is not unreasonable to expect Vision to explain the atypical result this year.
- The Board doesn’t explain why an asset ‘Leasehold improvements’ is included at 30 June 2020 when the lease on the building was ended on 31 March 2020 [Financial Report 2020, page 1].
- Despite declaring that ‘Comparatives and consistent with prior years, unless otherwise stated’, and having to comply with AASB 108, there are many unexplained changes to the 2019 figures.
- The Statement of Changes in Equity does not disclose all that is required by the Accounting Standards [AASB 101.106].
- A depreciation rate for ‘Building improvements’ is included in Note 3 even though the work is incomplete; at the same time no rate is included for ‘Leasehold improvements’ even though they were an asset during the year.
- The Board does not explain why there is ‘Revenue from government including grants’ of $15K shown in the AIS 2020, but not in the financial statements.
“This related to COVID related government payouts which were given to all churches and charities.”
This does not explain the mismatch between the Annual Information Statement and the financial statements.
- Neither COVID-19 nor the useful life of assets is included in Note 4 ‘Critical Accounting Estimates and Judgments’.
- The Board have not included a Note on commitments. Are there none to do with the new building?
“These financial accounts only cover the period until 30 June at which point the sale of the building had still not been finalised.”
But what about the contract for the refurbishment?
- The choice of special purpose statements may explain why the Board has not included a ‘Events after the reporting period’ Note. This is probably where an update on the new building would have been included. Not that it can make up for something that should be in the financial statements, but here’s one from the Annual Report:
“Noted and yes Ted is valid in his request for such disclosure.”
- There is no reconciliation between the surplus shown in the Statement of Profit or Loss and Other Comprehensive Income and the net cash from operations in the Statement of Cash Flows.
- Vision has a bookshop, but there is no explanation for the absence of inventory in the accounts. (It is assumed that the revenue is included in ‘Miscellaneous income’.)
“All inventory in the bookstore was provided under a ‘consignment’ arrangement from a local Christian bookshop. In other words no formal inventory is purchased/ maintained.”
Given that Vision do not claim that the reason for no inventory is ‘self explanatory’ (see above), and given that the lack of information was identified last review, why not include this answer in this year’s accounts?
The use of donations
If you are still willing to rely on the accounts, this is where the donations went (with last year’s in the second column):
“In contrast to Teds suggestion, given the above there is every reason to rely upon the accounts.”
- There were three full time, two part time, and one casual employee [AIS 2020]. The cost of them was 51% of expenses.
- The amount directed to ‘missions’ was 13% of expenses, 8% of revenue.
From the Board Report, Financial Report 2020, these were the people who are responsible for the financial statements:
Ruth van lerschot
Eric van lershot
- The composition of the Board is not shown on the website. However, it is publicly available on the ACNC Register.
- The Register shows that another two people have been added since the accounts were approved:
- Laura Lamerton
- David Lamerton (Is it this David Lamerton?)
- The Board’s eight members includes two of the three pastors, and their spouse.
- The Board, not the members,
- Admits members.
- Removes members.
- Appoints pastors.
- Removes pastors.
- Selects new Board members. (This is subject to a vote by the members, but experience in similar situations says that it is unlikely that the Board nominations would be overturned.)
- Independent directors comprise only half the Board, and there is no oversight by an eldership.
Nothing systematic on impact was found.
- See here for the previous review. ↑
- A section in the article, Donating and Volunteering:
- Focus on the nature of the charity’s work, its beneficiaries and the impact the charity is having in the community.
- Is it clear what the charity is trying to achieve and how its activities work towards its objectives?
- Would you like to spend your money, or time if volunteering, to support these objectives?
- Is the charity being transparent about its activities?
- ‘https’ does not, as implied by the ACNC, appear in all browsers. ↑
- These do not match those in the constitution. ↑
- Here is the list of activities current at the time of closing services at the church premises: ↑
- ‘When Helping Hurts by Brian Fikkert and Steve Corbett says this about sharing the Gospel: ‘A host of contextual issues determine the best manner and the appropriate time to present the gospel verbally, particularly in militant Muslim or Hindu settings. But without such a presentation, it is not possible for people to be personally transformed in all their relationships, which is what poverty alleviation is all about [Kindle Locations 1262-1264, Moody Publishers]. ↑
- From Objective of General Purpose Financial Reporting (SAC2), www.aasb.gov.au: ↑ ↑ ↑
- Vision have changed their auditor. It would be interesting to know why. The auditor, unlike in the previous year, did not prepare the financial statements. One wonders who filled this gap. ↑
- Enhancing Not-for-Profit Annual and Financial Reporting, March 2013, accessed from their website March 2020. ↑
- Shown in the Statement of Cash Flows as given by ‘customers’. ↑
- www.auasb.gov.au, page 17, accessed 17 December 2020 ↑
- See also Australian Accounting Standards, www.aasb.gov.au, AASB 101. ↑
- The distinction is not just a nicety: reporting obligations of charities are based on ‘charity size’, and ‘charity size’ is based on revenue, not income. ↑
- Assumed to be the same as ‘Building improvements’ in Note 3(c). ↑
- The Board do not comment on any requirement to ‘make good’ at the end of the lease of the old building. ↑
- Some other more minor mistakes:
- ‘Short-term’ is not defined in the ‘Cash and cash equivalents’ Note.
- ‘Plant and equipment’ as a title in the balance sheet rather than ‘Property, plant and equipment’.
- Not all the information required by AASB 101.138 is given.
- AASB 16 Leases is included in Note 2, but no leases were held.
- It appears that the generic wording in the template that appears to have been used to prepare the accounts has been left in Note 3(i).
- A majority is generally considered best practice; for example see Standard 3.3 in the Standards issued by the CMA Standards Council, an organ of the Australian evangelical movement. ↑