Internal auditors critical pose NFP governance questions

The Institute of Internal Auditors – Australia has drafted 20 critical questions that directors of NFPs should be asking, as part of a new guide for directors of NFPs.

IIA-Australia CEO Peter Jones said the questions were a quick and easy reference for an estimated 257,000 Australian NFPs and will assist with good governance, which Mr Jones believes it “as important in the charity and NFP sectors as it is in the financial services sector.”

The ACNC revoked the charity registrations of 22 organisations in 2017-18 the highest amount ever revoked in a year.

Charities had corrected more than $20 billion in revenue and $354 million of assets to improve the accuracy of the charity register.

The 20 critical questions include:

  • Is the NFP organisation’s governance framework contained in a formal document that adopts a holistic multidimensional approach to capture all structures and processes across the organisation: code of conduct and conflict-of-interest policy covering members, paid employees, non-paid volunteers and suppliers; strategic management, based upon risk and with strategically-based budget-setting; cash-reserves policy; risk management, insurance, fraud risks; resource management; information management; compliance and reporting; and audit and review?
  • Have NFP organisational and fraud risks been identified? Are there appropriate risk management actions in place, monitored and regularly reported to the board?
  • Have governance activities, responsibilities and delegations been clearly defined, specifically for NFPs, and detailed in a fit-for-purpose governance document that is regularly reviewed and updated?
  • How does the board gain assurance that all government and regulatory requirements have been identified and assigned, and that the NFP conforms with these requirements?
  • And a killer question: How does the NFP board know that its governance and assurance is operating effectively to ensure the organisation’s long-term sustainability?

“The Australian Charities and Not-for-profits Commission reported that charities’ annual revenue in the 2016 financial year was more than $142 billion”, said Mr Jones.

Charities and NFPs are among Australia’s most significant employers.

The complete list of questions is available at https://www.iia.org.au/technical-resources/20-critical-questions-series.

RSPCA NSW underpaid employees

The RSPCA in NSW has underpaid 41 staff members by more than $120,000 due to a payroll error. The underpayment affected 22 of the animal-welfare charity’s 531 employees. Nineteen former employees were also underpaid.

An internal investigation began in 2017 when a staff member drew attention to potential errors.
A spokesman said: “It wasn’t a deliberate underpayment of staff or anything malicious. Certain employees were owed certain allowances based on their award that weren’t properly assessed or given at the time.”

The charity said it had gone to significant effort to review every personnel file for each of our staff members to ensure that pay rates, classifications, allowances and other benefits are consistent with the relevant awards or agreements and the individual staff member’s letter of offer”.