Not for Profit News- Fraud & NOCLAR, Ethics, Governments & ATO

Fraud and NOCLAR

What good local government integrity frameworks look like

A new 88-page research report shows how several local governments protect themselves against corruption.

Released by the Independent Broad-based Anti-corruption Commission, Local government integrity frameworks review identifies a sample of councils that have built solid anti-corruption frameworks, providing models for other councils.

A key objective of IBAC’s review is to help councils review and strengthen their own integrity measures against corruption.

IBAC found that six councils had sound frameworks and good practice in several areas. The commission reported that improvements could be made in others.

Corruption risks were identified in procurement, cash-handling, conflicts of interest, gifts, benefits and hospitality, employment practices, and misuse of assets and resources.

IBAC CEO Alistair Maclean said that the review was undertaken to show councils what a good integrity framework might look like. IBAC would support councils in examining their approaches and identify opportunities to improve their systems and controls to identify and manage corruption risks.

‘We recommend all Victorian councils use the findings from this important review to assess their own integrity frameworks and identify where they can improve,’ Mr Maclean said.

‘Corrupt conduct by public-sector employees, including council employees, adversely [affects] delivery of vital services and facilities. It wastes significant time and public money, means there is unfairness in the opportunity to provide services to councils, and damages reputations and community trust.’

The review showed that councils could improve on the development and communication of a clear policy on conflicts of interest, a broader consideration of corruption risks associated with employment practices, and ensuring that suppliers understood the probity standards expected of them.

The IBAC review also found that councils could do more to encourage reporting of suspected corrupt conduct.

‘It is critical that councils increase efforts to reassure employees they can be protected and that their report will be taken seriously,’ Mr Maclean said.

IBAC’s review sample included metropolitan, outer-metropolitan and regional councils. They were not identified.

The review was not an audit, the focus being on good practice and potential opportunities for improvement.

The full report and summary are available here.

Ethics

Getting to know revised Fundamental Principles

The Accounting Professional and Ethical Standards Board has restructured considerably its Code of Ethics for Professional Accountants (including Independence Standards).

The revision is 211 pages. The previous version had 133 pages.

Operative from 1 January next year, time is short to understand the changes and implement them.

The code sets out fundamental principles of ethics for members, reflecting the profession’s recognition of its public-interest responsibility. The principles establish the standard of behaviour expected of a member of the accounting bodies whether in business or in public practice.

A member in business is employed or engaged in an executive or non-executive capacity in such areas as commerce, industry, service, the public sector, education, the not-for-profit sector, regulatory bodies and professional bodies, or a member contracted by such entities.

There are five fundamental principles. While they sound familiar, there have been subtle changes and more explicit identification of a member’s responsibilities.

A member must comply with each of them. They are:

 

Principle Explanation Member’s responsibilities
Integrity Be straightforward and honest in all professional and business relationships Not knowingly be associated with reports, returns, communications or other information where the member believes that the information: contains a materially false or misleading statement; contains statements or information provided recklessly; or omits or obscures required information where such omission or obscurity would be misleading

When becoming aware of having been associated with information take steps to be disassociated from that information

Objectivity Not to compromise professional or business judgements because of bias, conflict of interest or undue influence of others Not undertake a professional activity if a circumstance or relationship unduly influences the member’s professional judgement regarding that activity
Professional competence and due care Attain and maintain professional knowledge and skill at the level required to ensure that a client or employing organisation receives competent professional activities, based on current technical and professional standards and relevant legislation; and Act diligently and in accordance with applicable technical and professional standards. Take reasonable steps to ensure that those working in a professional capacity under the member’s authority have appropriate training and supervision

Where appropriate, make clients, the employing organisation, or other users of the member’s professional services or activities, aware of the limitations inherent in the professional services or activities

Confidentiality Respect the confidentiality of information acquired as a result of professional and business relationships Be alert to the possibility of inadvertent disclosure, including in a social environment, and particularly to a close business associate or an immediate or a close family member

Maintain confidentiality of information within the firm or employing organisation

Maintain confidentiality of information disclosed by a prospective client or employing organisation

Not disclose confidential information acquired as a result of professional and business relationships outside the firm or employing organisation without proper and specific authority, unless there is a legal or professional duty or right to disclose

Not use confidential information acquired as a result of professional and business relationships for the personal advantage of the member or for the advantage of a third party

Not use or disclose any confidential information, either acquired or received as a result of a professional or business relationship, after that relationship has ended

Take reasonable steps to ensure that personnel under the member’s control, and individuals from whom advice and assistance are obtained, respect the member’s duty of confidentiality.

Continue to comply with the principle of confidentiality even after the end of the relationship between the member and a client or employing organisation. When changing employment or acquiring a new client, the member is entitled to use prior experience but shall not use or disclose any confidential information acquired or received as a result of a professional or business relationship

Professional behaviour Comply with relevant laws and regulations and avoid any conduct that the Member knows or should know might discredit the profession Shall not knowingly engage in any business, occupation or activity that impairs or might impair the integrity, objectivity or good reputation of the profession, and as a result would be incompatible with the fundamental principles.

When undertaking marketing or promotional activities, a member shall not bring the profession into disrepute.

Shall be honest and truthful and shall not make: exaggerated claims for the services offered by, or the qualifications or experience of, the member; or disparaging references or unsubstantiated comparisons to the work of others

We will look in future editions at other elements of the code as they affect members in business.

Governments and ATO

Senate committee tables fundraising report

The senate select committee on charity fundraising has tabled an 89-page report.

Charity Fundraising in the 21st Century is divided into five chapters:

  • Chapter 1 provides an overview of the conduct of the inquiry
  • Chapter 2 details previous inquiries and recent developments relevant to the inquiry’s terms of reference
  • Chapter 3 outlines the current legislative and regulatory frameworks governing charity fundraising and not-for-profits at the state, territory and federal levels as well as bodies responsible for their oversight and enforcement
  • Chapter 4 highlights issues identified in the absence of a consistent nation-wide regulatory framework for charity fundraising, and
  • Chapter 5 outlines the options for reform to fundraising regulation of charities and not-for-profits and sets out the committee’s views and recommendations.

The committee heard that many charities failed to comply with relevant regulations and that non-compliance with various commonwealth and state regulations was both accidental and deliberate.

The committee made two recommendations to the Australian government:

  • To provide urgently a public response to the recommendations made in the review panel’s report Strengthening for Purpose: Australian Charities and Not-for-profits Commission Legislation Review, and
  • To commit to working with state and territory governments and the NFP sector to develop a consistent national model for regulating NFP and charitable fundraising activities within two years.