Muslim Charity Faces ACNC Audit

The charity regulator has formalised an agreement with the Australian Federation of Islamic Councils (AFIC), also known as Muslims Australia, to appoint an independent auditor to examine the organisation’s governance and record keeping practices.

The Australian Charities and Not-for-profits Commission (ACNC) said the AFIC had voluntarily entered into an enforceable undertaking after an investigation raised a number of concerns about the charity’s operations.

The ACNC said in a statement outlining the enforceable undertaking that it was concerned that AFIC may not have operated as a Not for Profit entity and may not have been transparent and accountable to its members.

“The ACNC is concerned that AFIC’s responsible persons may not have made decisions in the best interests of AFIC and to further its charitable purposes. Conflicts of interest have not been disclosed or appropriately managed and AFIC’s financial affairs have not been responsibly managed,” the ACNC document said.

“Registered entities must keep records (section 55-5(1) of the ACNC Act). The ACNC is concerned that AFIC may not have kept written financial records that correctly record and explain its transactions.”

As part of the undertaking Muslims Australia must carry out an immediate audit of its finances and operations and provide access to all its accounts, records, premises and personnel.

ACNC assistant commissioner David Locke said that an enforceable undertaking specified a series of actions that a charity agrees to take, in order to comply with its obligations under the ACNC Act and Regulation.

“The enforceable undertaking is a formal mechanism the ACNC can use to ensure a charity takes certain steps to satisfy their obligations as a registered charity,” Locke said.

“It is enforceable through the court.

“Where appropriate the ACNC works with charities to address concerns and to ensure charities understand and comply with their obligations. However, we will act swiftly and firmly where vulnerable people or significant charity assets are at risk, where there is evidence of serious mismanagement or misappropriation, or if there is a serious or deliberate breach of the ACNC Act.

“The ACNC has a range of formal powers it can use, including warnings, directions, removing responsible persons, enforceable undertakings and revocation.

“AFIC is working with the ACNC and we are pleased that they are doing so and that a comprehensive and independent audit will be conducted in relation to the concerns identified. We consider this as a positive step in increased accountability and transparency for AFIC.”

The newly-elected AFIC president Keysar Trad confirmed that the organisation would work with the ACNC to address the concerns.

Trad said that the enforceable undertaking would “ensure that the organisation would continue to meet its obligations as a registered charity”.

“We at AFIC aim for the highest level of transparency, accountability and integrity in our dealings. We welcome the independent audit and the opportunity to work with the ACNC,” Trad said.

“AFIC has already taken some steps to address the ACNC’s concerns.

“Specifically AFIC (Muslims Australia) is in the process of separating itself from the schools which it previously held responsibility for managing.”

AFIC currently operates six Islamic schools which have been the subject of media reports about financially viability.

Trad replaced Usaid Khalil as the treasurer of AFIC earlier in the year and then took over as president, replacing Hafez Kasem in July.

A list of all ACNC compliance decisions can be found here.