Accountability, Financial Reporting, Standards and Disclosure

1. Accountability, Financial Reporting, Standards and Disclosure Presentation by: Dr Ted Flack Julie-Anne Mee State Manager Communications and Fundraising The Australian Centre of Philanthropy and St Vincent de Paul Society Nonprofit Studies School of Accountancy Queensland University of Technology

2. Today? • Senate Economic Committee status • Standardisation and the Standard Chart of Accounts • The role of the Annual Report

3. Senate Economic Committee • Enquiry on disclosure • Submissions • Process/position/results

4. Standardisation • Standardisation best described by its benefits • Consistency • Comparability • Sectoral coordination • Communication and discussion • Better info for decision makers • Simpler reporting (by preparers) • Accountability • Robustness

5. Accounting Template • 2002 – 2004: collation of data from Queensland government agencies about grants. • 2004 – 2006: collaborative development of a Standard Chart of Accounts (SCOA) for Queensland • 2nd – 3rd ¼ 2006: training and implementation of SCOA in QLD government funders and nonprofit recipient organisations • 1st – 2nd ¼ 2007: collation of data from New South Wales government agencies about grants and collaborative development of SCOA (using QLD as base platform) • 3rd ¼ 2007: training and implementation of SCOA in NSW funders and recipient organisations

6. Accounting Template • 2006 - 2007: discussions with Federal agencies with FaCSIA as lead agency. • 2007: discussions with Western Australian human services departments • 2007: participation in the Victorian Review of Not-for-Profit Regulation activities and report • Late 2007: initial discussions with Tasmanian, South Australian and New Zealand human services departments • Late 2007: updated Queensland SCOA using learnings from New South Wales implementation

7. Advantages of a Standard Chart of Accounts • Consistent and uniform reporting; • True financial performance can be ascertained; • Assists auditors in the annual audit; • Clear guidelines for account names; • Incoming treasurers and bookkeepers have a framework; and • Enables benchmarking and developnment of KPI’s

8. Sample page in SCOA

9. Sample page in SCOA

10. Next Phases • National approach • Funding acquittals align with standards • Accounting and auditing profession engage with nonprofit sector • Appropriate financial literacy training for nonprofit boards and staff rolls out • Research is supported about impact of nonprofit financial performance (eg benchmarking and KPIs)

11. Financial Reporting Standards • In Australia – sector or transaction neutrality - AASB

12. Part 2 SenateInquiry into disclosure regimes for charities and not-for-profit organisations.

13. What is the underlying policy objective of the Inquiry? To provide interested parties with the ability to obtain useable information about the operations and finances of nonprofit organisations

14. What information do interested parties want?

15. Stakeholder preferences • Although a large majority of stakeholders said they wanted to be provided with financial statements, most also said they did not use them or did not understand them. The research found that the value of financial statement lies in their symbolic value in that they signal that proper financial oversight is in place. • Stakeholders who have a personal interest in these organisations tend to want to be provided with “soft” information about the organisation. Preferred disclosures include board reports, descriptions of activities, profiles of board members and human interest stories about the organisation.

16. How “useable” is the financial information? • “Inside” stakeholders can command further information - membership rights • Annual General Meetings • Elections of office bearers • Day-to-day involvement • Donor rights? • Outside stakeholders need standardised information • Audited financial statements • Sector-specific accounting standards • Standard chart of accounts

17. Size and “publicness” matter! • Small npos that are really only the concern of the participants, should not be over regulated. • Large npos, that rely on the support of the general public, should be required to be publicly accountable

18. One way to organise these ideas

19. Financial reporting

20. Non-financial reporting • Annual reports published on the web • Regulate for minimum disclosures • Objectives, achievements and plans • Office bearers’ reports • Encourage high quality (industry awards etc)

21. Thank You !!! Any Questions ???