Queensland University of Technology CRICOS No. 00213J Moving closer to a sector specific regulatory framework – solving the Australian not- for-profit accounting muddle. Julie-Anne Mee The Australian Centre for Philanthropy and Nonprofit Studies 13 November, 2008 Perth CPA Not-for-profit Conference
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Julie-Anne Mee The Australian Centre for Philanthropy and Nonprofit Studies 13 November, 2008
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Queensland University of Technology
CRICOS No. 00213J
Moving closer to a sector specific regulatory framework – solving the Australian not-
for-profit accounting muddle.
Julie-Anne MeeThe Australian Centre for Philanthropy and
Nonprofit Studies13 November, 2008
PerthCPA Not-for-profit Conference
CRICOS No. 00213Ja university for the worldrealR
Today …
• Apples and Pears - Standard Chart of Accounts• Cutting to the Core - Reducing the Costs of
Government imposed paperwork
CRICOS No. 00213Ja university for the worldrealR
• Standardisation best described by its benefitsΩ ConsistencyΩ ComparabilityΩ Sectoral coordinationΩ Communication and discussionΩ Better info for decision makersΩ Simpler reporting (by preparers)Ω AccountabilityΩ Robustness
Standardisation
CRICOS No. 00213Ja university for the worldrealR
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
CRICOS No. 00213Ja university for the worldrealR
Accounting Template
• 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
• 2006 - 2007: discussions with Federal agencies with FaCSIA as lead agency.
CRICOS No. 00213Ja university for the worldrealR
• 2007: discussions with Western Australian human services departments
• 2007: participation in the Victorian Review of Not-for-Profit Regulation activities and report issued
• 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
Accounting Template
CRICOS No. 00213Ja university for the worldrealR
• 2008: Victorian Action Plan developed after review with project team being assembled during final quarter to implement during early - mid 2009.
• 2008: Western Australia Human Services Roundtable endorsement for the Department for Communities to undertake a SCOA project with implementation being recommended during 2009/10 – currently in the middle of this
• Senate Economic Committee Inquiry – contributions and review.
Accounting Template
CRICOS No. 00213Ja university for the worldrealR
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 development of KPI’s
CRICOS No. 00213Ja university for the worldrealR
• In Australia – sector or transaction neutrality – AASB• Senate Economic Enquiry review• 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)
Financial Reporting Standards and Next Phases
CRICOS No. 00213Ja university for the worldrealR
Sample page in SCOAEXPENSES 6-0000
MYOB Account Number
SuggestedAccount Names Data Dictionary/Description of Account
IFRS Accounting Standards References
OtherComments
6-0000 Expenses Expenses are outflows or depletions of assets or incurrences of liabilities that result in decreases in equity other than those relating to equity. Expense accounts may elect to record "in kind" transactions and should have an equal and opposite Income account for the value for a nil result. Generally small to medium organisations will not recognise these items in their accounts.
Framework par 70(b)
6-0010 Accounting Fees
This account represents accounting and bookkeeping fees. It excludes audit fees (which is its own separate account). Includes GST, FBT and Financial Business advice.
6-0020 Advertising & Promotion
This account covers all advertising, marketing and promotion fees paid by nonprofits in the course of marketing, advertising and promotion of events and services, etc. It also includes all printing relating to promotional material.
6-0025 Agency Temp Staff
This account includes the costs of temporary staff employed for whatever reason from an agency. This account excludes consultancy staff.
6-0030 Amortisation Expense
Amortisation expense for the current year relating to intangible assets.
AASB 138.118(d)
CRICOS No. 00213Ja university for the worldrealR
Sample page in SCOA
6-0040 Assets Purchased <$5,000
The amount of $5,000 is arbitrary; the limit may be set by the organisation. This account shows all assets (including computers) purchased by the nonprofit organisation that have an individual value of less than $5,000 each. Any asset above $5,000 is to be capitalised and shown as an asset in the Balance Sheet. Some items that are expensed may still need to be recorded in the Fixed Asset Register.
6-0050 Audit Fees This account includes fees associated with an audit of financial statements. It excludes accounting or bookkeeping fees (these are included in accounting fees above).
AASB 101.AUS 126(a)
6-0060 Auspicing Fees
This account represents fees paid by a non-profit organisation to another organisation for providing auspicing support. The auspicing organisation signs agreements, carries financial risk and legal responsibility for activities of the auspiced organisation. It also includes internal auspicing fees. These are true auspicing rather than recoupment of administrative and project expenses.
6-0070 Bank Charges
This account represents all charges associated with the various bank accounts held by a nonprofit.* It includes State Government Tax, account keeping fees, EFTPOS fees, etc. * It excludes credit card fees (which are recorded in a separate account).
6-0080 Bad Debts These are debts which have been written off due to non-recovery.
• Electronic copies of CPNS Working Paper 39: How Long is a Piece of Red Tape? The Paperwork Reporting Costs of Government Grants is available from
• http://eprints.qut.edu.au/archive/00012986/
Cutting to the Core - Reducing Red Tape
CRICOS No. 00213Ja university for the worldrealR
• Compliance Pilot Survey• For a one year period, the project surveyed 20
nonprofit organisations on their compliance costs in formulating submissions, reporting, and other government paperwork.
• Variations in size, purpose & multiple funders NPOs kept a log of all government
documentation and further 2 page survey. 14 NPOs remained for the whole 12 months.
Compliance Costs
CRICOS No. 00213Ja university for the worldrealR
Summary
Over the 12 months: An average of 143.57 hours (median of 95 hours) to
complete government generated paperwork. Average time taken per form was 5.05 hours, but with a
median of 1.00 hour. Pre Survey views:
Estimates were much higher and this has implications for government red tape review
CRICOS No. 00213Ja university for the worldrealR
• The fourteen NPOs completed:– 46 grant submissions (on average taking 15.17 hours
to prepare);– 157 grant acquittals (average 6.04 hours per
acquittal);– 90 tax forms (average 1.87 hours per form); and– 111 ‘other’ forms, e.g. database information on client
services for Health or Disability departments (average 1.88 hours).
• Grant submissions and acquittals, together made up just over 50% of all compliance paperwork for NPOs.
CRICOS No. 00213Ja university for the worldrealR
Form Issues
• Less than 50% of forms had instructions/guides• Only one third provided a contact point• Limited use of external advisors to complete
forms• Time constraints in appln. & external audit
issues
CRICOS No. 00213Ja university for the worldrealR
Department Analysis
Type of Organisation
Average time for compliance
Average Cost per form
Health 21.5 hours $1,105.00
Culture & Recreation
15.7 hours $714.00
Communities 4.6 hours $ 221.00
Housing 2.9 hours $ 102.00
DSQ 1.9 hours $ 134.00
CRICOS No. 00213Ja university for the worldrealR
Some Suggestions….
1. Whole of Government data dictionary 2. Collect data once 3. Data collected should be either useful or returned as useful
information 4. Communication about the fate and reasons of failed
submissions needs improvement 5. Include adequate instructions and a contact point . 6. One size does not fit all7. Government should examine its funding submission processes 8. Further research on benefits of red tape reduction measures 9. Further quantitative research is required into the burdens and
benefits of statutory mandated quality accreditation processes10. Further research into the non-paperwork burden of government