The Australian Charities & Not-for-profits Commission has released its Charities Compliance Report for 2017, which identifies an increase in poor governance in Australian Charities that it has investigated.
The ACNC received a 40% increase in concerns in 2017, with a total 1,695. This does not necessarily reflect the true status of poor governance across the sector as a whole, but is at least indicative of increased awareness to identify and report concerns.
More specifically, the ACNC reports that the most common issues identified relate to poor internal financial controls, inadequate due-diligence of employees & partners (a common issue across many sectors!) and failure of Charities responsible persons to act in the best interests of the Charity (also not an issue isolated to the NFP Charities sector!).
We note these results are consistent with findings reported by the ACNC since the compliance report year 2015. In particular, we highlight that the ACNC's number 1 focus for 2018 remains to be fraud and financial mismanagement.
The good news for the sector is that these issues can be readily addressed by Charities seeking professional assistance in:
1. Conducting risks assessments and assessment against best practice
2. Workshops and training with Board Directors/responsible persons, especially to help them determine their risk appetite
3. Identifying and remedying internal controls and resourcing gaps
4. Implementing fraud control frameworks (including policies and procedures covering fraud, corruption, conflicts of interest, employee and supplier screening) and training for employees
5. Implementing independent Whistleblowing Reporting Services, supported by training and monitoring
Charity Compliance Report 2017 - Increasing poor governance.