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
CRICOS No. 00213J
Queensland University of Technology
Today …
• Apples and Pears - Standard Chart of Accounts
• Cutting to the Core - Reducing the Costs of
Government imposed paperwork
a university for the
real world
R
CRICOS No. 00213J
Standardisation
• Standardisation best described by its benefits
Ω
Ω
Ω
Ω
Ω
Ω
Ω
Ω
Consistency
Comparability
Sectoral coordination
Communication and discussion
Better info for decision makers
Simpler reporting (by preparers)
Accountability
Robustness
a university for the
real world
R
CRICOS No. 00213J
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
a university for the
real world
R
CRICOS No. 00213J
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.
a university for the
real world
R
CRICOS No. 00213J
Accounting Template
• 2007: discussions with Western Australian human
services departments
• 2007: participation in the Victorian Review of Notfor-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
a university for the
real world
R
CRICOS No. 00213J
Accounting Template
• 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.
a university for the
real world
R
CRICOS No. 00213J
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
a university for the
real world
R
CRICOS No. 00213J
Financial Reporting Standards
and Next Phases
•
•
•
•
•
•
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)
a university for the
real world
R
CRICOS No. 00213J
Sample page in SCOA
EXPENSES 6-0000
MYOB
Account
Number
Suggested
Account
Names
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.
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.
Data Dictionary/Description of Account
a university for the
real world
IFRS Accounting
Standards References
Other
Comments
Framework
par 70(b)
AASB 138.118(d)
R
CRICOS No. 00213J
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).
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 nonrecovery.
a university for the
real world
AASB 101.AUS 126(a)
R
CRICOS No. 00213J
Links for use
• CPNS website: http://www.bus.qut.edu.au/research/cpns/
• CPNS wiki space:
https://wiki.qut.edu.au/display/CPNS/CPNS+Wiki+Home
• WIKI space – Develop Your Organisation (DYO):
https://wiki.qut.edu.au/display/CPNS/DYO+Home
• WIKI space - DYO – Standard Chart of Accounts (SCOA):
https://wiki.qut.edu.au/display/CPNS/Standard+Chart+of+Accounts
• WA Wiki specific:
https://wiki.qut.edu.au/display/CPNS/Western+Australia
a university for the
real world
R
CRICOS No. 00213J
Cutting to the Core - Reducing Red Tape
• CPNS web site
– Summary
• http://www.bus.qut.edu.au/research/cpns/documents/2008_4P
aperworkReportingCostsofGovtGrants.pdf
– Full Paper
• 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/
a university for the
real world
R
CRICOS No. 00213J
Compliance Costs
• 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.
a university for the
real world
R
CRICOS No. 00213J
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
a university for the
real world
R
CRICOS No. 00213J
• 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.
a university for the
real world
R
CRICOS No. 00213J
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
a university for the
real world
R
CRICOS No. 00213J
Department Analysis
Type
of Average time for Average Cost
Organisation
compliance
per form
Health
21.5 hours
Culture
Recreation
& 15.7 hours
$1,105.00
$714.00
Communities
4.6 hours
$ 221.00
Housing
2.9 hours
$ 102.00
DSQ
1.9 hours
$ 134.00
a university for the
real world
R
CRICOS No. 00213J
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 all
7. 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 processes
10. Further research into the non-paperwork burden of government
regulation.
a university for the
real world
R
CRICOS No. 00213J