Australia’s charities face increased scrutiny, with 90 ACNC investigations during 2018 leading to 16 charities losing their registration, highlighting the need for robust and trackable accounting systems and processes.
Prioritising “fraud and financial mismanagement” as one of the four forms of conduct detrimental to trust and confidence in the charity sector, the ACNC’s latest report details that a further 24 charities in Australia entered into compliance agreements. In addition to this, 18 charities were issued penalty notices during 2018.
Hopscotch Accounting believes that professional advice and technology are key to assisting charities to set up systems and processes, enabling them stay on top of compliance requirements.
ACNC key areas for concern in financial mismanagement
The ACNC detailed the particular problem areas for NFPs – money laundering, tax avoidance and private benefit – with the 2018 report revealing:
- The biggest type of issue encountered by the ACNC Compliance team was private benefit (26%)
- 113 double defaulter charities had their registration revoked for failure to submit two Annual Information Statements
- 20% of concerns assessed by the ACNC Compliance team were identified by internal processes – up from 8% in 2017.
The 2019 financial year for NFPs
Financial stakes are getting higher with charity assets doubling since 2017. “The registered charities that were the subject of an ACNC compliance case in 2018 controlled nearly $12 billion in assets,” noted the ACNC Commissioner Hon Dr Gary Johns. He said that the ACNC would continue its work in 2019, responding to “concerns about charities that could adversely impact public trust and confidence”.
How can Cloud Accounting assist with compliance?
At Hopscotch we work with NFPs as their outsourced Accounts Department, using Cloud Accounting to identify and repair organisational compliance weakspots.
We set up good financial management in line with the ACNC guidelines.
Cloud technologies have particular benefits for Charities and Not-for-profits, including:
- Transparent donation and expense information shared amongst donors, board members, staff and volunteers
- Invoices paid rapidly through online payment features
- Quick and efficient staff payments through easy to use payroll system
- App based access for continuous monitoring of accounts, allowing organisations to continue to share content and connect with people in real time.
- Dovetailing with external fundraising and donor management, marketing, payments and workflow management using third party apps.
- Collaborative, cloud-based accounting software with built-in encryption resolves risks involved in exchanging data back and forth.
We have a strong track record working with NFPs to help them grow, freeing them up to focus on their main goals and objectives. You can see what our clients say here or contact us today for an Accounting Efficiency & Risk Check where we will review your accounting operations to identify ways we can save you time and money.