The Senate Economics Committee has a brief to examine nonprofit accountability and the following submissions and hearing evidence mentioned the QUT SCOA issues:
Hearing in Rockhampton on Friday 18 July 2008 Ms Margaret Hornagold of Darumbal Community Youth Services:
"Mrs Hornagold-- They do that. So do the Queensland state government, through their strengthening non-government organisations initiatives, which have been running over the last two to three years - and they had a specific Indigenous NGOs component of that. QCOSS tendered and got the funding to roll out a whole series of workshops for NGOs across the state around compliance issues, governance, chartered accounts and all those kinds of things. They came to Rockhampton and organisations went along and were part of that and got some really good advice. The Queensland University of Technology was included in that, too. They had people there who could provide a lot of information around sustainability. They looked at some models from the UK, Canada and America to see what we could draw from those down to a local level. We really try to not be blinkered to just what we do here but realise that we are part of a wider network out there."
*Submission 12*Dr Ted Flack, PhD. CFRE
"A standard chart of accounts for reporting of government funding .
that the Committee recommend to the government that it develop a Standard Chart of Accounts for use with all federal government funding agreements with not-for-profit organisations;
9. A standard data dictionary for reporting government funded services
- that the Committee recommend to the government that it develop a standard data dictionary for use with all federal government service agree agreements and contracts with not-for-profit organisations."
Accounting standards for not-for-profit organisations
The disclosure of comparable financial information is the foundation stone of not for-profit accountability and transparency. Whilst ever there is wide discretion available to accountants to report important not-for-profit financial transactions in their choice of ways, this foundation stone is an illusion.
See for example:
The Industry Commission In their report entitled .Charitable Organisations in Australia., Report No. 45, 16 June 1995, the Industry Commission stated:
"Public accountability requirements of Community Social Welfare Organisations (CSWO.s) across Australia are currently varied and illdefined. This is partly due to the diverse legal structure of CSWO.s; the lack of specific accounting standards for the sector; and the not for profit status of CSWO.s, which absolves them from the
requirement to lodge tax returns..
The Industry Commission made the following recommendation, which addresses the problem of the lack of specific accounting standards:
"The Commonwealth government should provide funds to the Australian Accounting Standards Board and the Public Sector Accounting Standards Board to develop within two years suitable accounting standards for Community Social Welfare Organisations.. The Commission believed that better financial accountability would be promoted by the development of a specific accounting standard for the sector. This standard would be in
addition to the current Australian Accounting Standards and would contain reporting requirements specific to the sector.
Professor Booth (1997:114) stated it clearly when he wrote:
.No accounting standard will ever solve all nonprofit entities accounting problems, even if they are solvable. At best, they can act to standardise practice and to increase the level of disclosure useful to interests external to the nonprofit organisation. It is therefore critical that NPOs, both individually and as a sector, identify accounting practices that they believe meet the above ends and best serve the accountability relationships that they confront. They must then be prepared to lobby standard setters to achieve the embedding of these practices in regulation..
The case for sector specific accounting standards could not be stronger. The doctrinaire, one-standard-for-all-approach is more of a reflection of the accounting standard setters. allocation of scarce resources than it is about the need for such a standard. The Committee is urged to make recommendation that the Commonwealth government fund the Australian Accounting Standards Board to develop sector specific accounting standards for the not-for-profit sector.
A standard chart of accounts for reporting of government funding.
Rather than detail the need for a standard chart of accounts for the reporting of government funds by funded not-for-profit organisations, I draw the Committee.s attention to the Centre of Philanthropy and Nonprofit Studies (CPNS) Chart of Accounts Project and the research that initiated the project.
A copy of the research report .Financial Reporting by Australian Nonprofit Organisations: Dilemmas Posed by Government Funders. by Drs Ted Flack and Christine Ryan is attached to this submission.
The research found that The findings confirmed the anecdotal evidence of multiple and irreconcilable
differences in the reporting requirements of government funding programs reported by nonprofit accounting practitioners. They also provided confirmation of the difficulties posed by the different definitions and instructions that are incompatible with regulatory requirements for the accounting treatment of some
transactions. The data collected generally supports practitioners. contention that the multiple and incompatible reporting requirements of funding departments impose significant compliance costs on government funded nonprofit organisations.
In response to these finding, CPNS in conjunction with Queensland Treasury developed a standard chart of accounts for use by all government departments requiring financial reports from not-for-profit organisations. Details of the project are available athttps://wiki.qut.edu.au/display/CPNS/Standard+Chart+of+Accounts
The Committee is urged to recommend to the Australian Government a similar standardised chart of accounts.
A standard data dictionary for reporting government funded services
Rather than detail the need for a standard data dictionary for the reporting of government funds services by funded not-for-profit organisations, I draw the Committee.s attention to the State Services Authority of Victoria.s report entitled .Review of Not-for-Profit Regulation.4 which stated
Data collection is perceived as one of the most onerous requirements of service agreements. All the case study organisations interviewed by the Review raised the burden imposed by data collection requirements. Many NFPs reported that service agreements impose requirements for reporting data using a large number
of different and often incompatible electronic data collection platforms. In addition, the Review found that data requests are frequently excessive and inconsistent.
The Authority recommended:To reduce the burden caused by multiple data collection and reporting systems, all Departments with service agreements should:¿ establish minimum data requirements for effective performance monitoring of services; review the existing data that service providers are required to collect against the minimum data requirements and rationalise reporting accordingly; and ¿ establish regular reporting of data back to each reporting organisation. It is recommended that the Committee recommend to the Commonwealth government that it undertakes a review of the data collected under funding agreements with not-for-profit organisations in order to implement a standard data dictionary as soon as possible.
Submission 27 - CPNS/School of Accountancy - QUTon the SCOA (whole submission is on the SCOA) This is CPNS's submission just about the SCOA and what we think it brings to the accountability deabate.
Centre for Philanthropy and Nonprofit Studies - standard chart of accounts
Also to standardise the reporting process, we advocate that a specific financial reporting
framework be developed for the not-for-profit sector. Some work has begun in this area in Queensland, with the development of a standard chart of accounts and data dictionary for small non-profit organisations that receive government funding - at the Centre of Philanthropy and Nonprofit Studies and the School of Accountancy (Queensland University of Technology) in their Non-Profit Organisation Chart of Accounts Project.
That all Australian Governments (Federal and State) agree to a Standard Chart of Accounts and reporting format in respect of acquittal of government grants.
That the Australian Government implement the Standard Chart of Accounts and data dictionary for Community Benefit Entity reporting developed by Prof. Myles McGregor-Lowndes, Queensland University of Technology. Submission 43 Mackillop Family Services 3.3 Standard Chart of Accounts and/or Accounting Standards
Transparency and comparability of financial information from nonprofit organisations would be achieved by the development of a standard chart of accounts and/or accounting standards designed specifically for nonprofits.
This has been the conclusion of a number of government reviews. In 1995 the Industry Commission recommended that the Commonwealth Government should provide funds to the Australian Accounting Standards Board and Public Sector Accounting Standards Board to develop within two years suitable accounting standards for Community Service and Welfare Organisations The Industry Commission noted that .the development of specific accounting standards for the sector would improve accountability of CSWOs It would help donors and the public generally to compare the performance of CSWOs; governments to assess the effectiveness of CSWOs in providing the services for which they are funded; and CSWOs to minimize the costs of accounting and reporting.
The 2007 Victorian State Services Authority Review of Not-for-Profit Regulation noted the benefits of a standard chart of accounts designed for nonprofits as: better targeted accounting standards; appropriate definitions; clarity regarding treatment of accounts; and improved quality and comparability of NFP financial data. Preliminary analysis conducted for the Review by the Allen Consulting Group estimated that potential savings to Victorian nonprofit organisations from the development of NFP accounting standards could be in the order of $5.58 million.
Submission no. 82 -Australasian Society for HIV Medicine (ASHM)Revised accounting standards for the NFP sector include specific, harmonised reporting requirements for the acquittal of government grants across all levels of government. This would require all government departments to agree to transition their requirements to these, standards, rather than to apply additional reporting on-top
Submission 92 Mr Ken Crofts It is recommended that nationally accepted definitions and classifications be used for NFP reporting such as the International Classification of Non-Profit Organisations (ICNPO) as adopted by the Australian Bureau of statistics12, and the John Hopkins Comparative Non Profit sector project. Classifications for financial statement items should comply with a standard such as the Standard Chart of Accounts developed by Queensland University of Technology.
Submission 128 Law Council of Australia
The Law Council also supports the adoption nationally, including by the Commonwealth and all state governments, of the Standard Chart of Accounts (SCOA) developed by the Queensland University of Technology, a full description of which is available at SCOA wiki.
In our view, the adoption of a standardised reporting framework such as the SCOA will lead to clear benefits in terms of transparency and accountability for government, the NFP sector as a whole, and individual NFPs. We note that the SCOA has already been implemented, or is in the process of implementation, by government departments in Queensland, New South Wales and Western Australia, and is being examined in Victoria.Evaluation of Implementation in Queensland of SCOA.
Lisa Kennedy of the University of Queensland has prepared an evaluation report for the Queensland Department of Communities about the implementation of the chart of accounts and accompanying training. She concludes:
"As stated elsewhere in this report, it is difficult to draw conclusions about the impact of the SCOA on all not-for-profit organisations in Queensland from the survey data. However, there does not appear to be any systematic bias to indicate that the survey respondents are unlike those who did not answer the survey. Most of the indications for those answering the survey are reasonably positive and therefore, it is likely that the implementation of the SCOA will have beneficial long term benefits throughout not-for-profit organisations." (p12-13)
(The report is no longer available)
Submission 174 Mission Australia P 4
"The work undertaken at the Australian Centre for Philanthropy and Nonprofit Studies at Queensland University of Technology by Professor Myles McGregor-Lowndes in this regard is a good starting point, and Mission Australia is currently implementing this standard chart of accounts in anticipation of it being adopted by government bodies."
Perpetual Limited P 4
ACFID P 4
A Standard Chart of Accounts be developed for use with all government funding agreements with NFP organisations;