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We’ve got no controls over that revenue

In reading this post, please keep its age in mind.

Charity CEOs and board/committee members, let me give it to you straight: there are too many of you out there accepting something you shouldn’t accept. Have you got a copy of your last audit report handy? Have a look near the end. Is there a paragraph headed ‘Basis for Qualified Opinion’? And does the second sentence say that your organisation ‘has determined that it is impracticable to establish control over the collection of (part or all of your ‘fundraising revenue)’? And therefore that they are unable to express an opinion on the completeness of that revenue.


I’ll not be surprised if you find that it does; I have just finished reading all the audit reports of the ‘medium’ charities in the ACT, and found that 14% had this qualification.


If it does say this, or similar, then your auditor is saying that, although you know that it would be best to have some controls to ensure that this fundraising makes it into your bank account, you have decided that it is not viable for you to implement those controls.


Is that true? That’s the first thing to ask, because it may be that it has either never been asked or asked so long ago that the response will be ‘We’ve always done it that way.’


If it’s not true, then I’d ask your auditor what’s going on.   The auditor is only meant to give that qualification if[i]

  1. They have considered each source of revenue separately. This is because, as those guiding us say, each source has its own distinct inherent and control risk…[para. 19][ii], and
  2. A lack of what they call ‘sufficient appropriate audit evidence’ for a significant source of fundraising revenue, means that they are unable to conclude that the financial report as a whole is free from material misstatement.


They are also meant to have talked to you about the issue. See the discussion here.


The question should only arise in the case of cash donations. Even then, auditors should know that their profession believes that a qualification for the completeness of these donations should not be given as a ‘matter of course’[iii].


If it is true (that you decided to have no controls) then perhaps it’s time to revisit the question? Never mind what it is saying to the few donors or funding bodies who care to read the report; what about the fact the risk of fraud and the consequent reduction of service to your beneficiaries from losing valuable dollars just after they came into your possession?


Time to call in some professional help?





[i] Guidance Statement GS 019 Auditing Fundraising Revenue of Not-for-Profit Entities, Auditing and Assurance Standards Board (AuASB), April 2011.

[ii] Here’s some example auditor descriptions of the part of fundraising revenue lacking controls that suggest that the sources of revenue were lumped together for testing (and therefore that maybe no qualification was necessary):

  • ‘revenue raising activities’ (Jenny Milward-Bason for the Campbell Primary School P & C
  • ‘income such as donations, client contributions and similar type income’ (Peter Irving, Peter Irving & Co, for the Council of the Ageing (ACT))
  • ‘income raised from fundraising’ (Stephen Bray for PANDSI)
  • ‘Fundraising and membership revenue’ (M L Port, DFK Collins for The Order of Australia)
  • ‘revenues and other fundraising activities’ (Amanda O’Reilly, Hardwickes, for ArtSound FM
  • ‘donations and other fundraising activity revenue’ (John Beard for Austral Asian Christian Church)

[iii] GS 019, paragraph 4.