Good 360
MEDIA, JOBS & RESOURCES FOR THE COMMON GOOD
NEWS  |  General, Leadership, Research

NFPs Dealing with Significant Governance Challenges


Wednesday, 5th May 2010 at 4:03 pm
Staff Reporter
A new Australian study highlights a number of significant corporate governance challenges facing the Not for Profit sector.

Wednesday, 5th May 2010
at 4:03 pm
Staff Reporter


0 Comments


FREE SOCIAL
SECTOR NEWS

 Print
NFPs Dealing with Significant Governance Challenges
Wednesday, 5th May 2010 at 4:03 pm

A new Australian study highlights a number of significant corporate governance challenges facing the Not for Profit sector.

The study, conducted jointly by corporate governance experts, Enterprise Care, and Moore Stephens, found that for many of the 600,000 organisations in Australia’s $60 billion NFP sector, corporate governance is a significant concern.

The study found that nearly eighty percent (80%) of Australian Not for Profit organisations rate the complexity of current financial reporting issues in the sector as moderate or extreme.

The survey of nearly 250 Not for Profit organisations found that they were struggling to cope with the burden of financial reporting, with many finding the systems currently in place were “ever-changing”, “complex”, “costly”, “excessive”, “unclear”, “time consuming”, “inconsistent” and “not fully developed”.

Of major concern to many organisations was the increasing complexity and obligation for reporting to funding bodies, which in many cases differed to the requirements set out in Australian Accounting Standards.

Enterprise Care Managing Director Damien Smith believes that greater focus on the efficiencies and effectiveness of financial reporting, both for the funding body and Not for Profit body, is essential.

Smith says a more robust justification for why the reporting is required, and the particular format the reporting is required in, should be the focus of any review of the sector.

The survey, conducted in March, asked Not for Profit organisations with Finance and/or Audit Committees a range of questions regarding the major issues and challenges facing their organisation.

Overwhelmingly, finance issues were of greatest concern, with budgeting, funding, increasing revenue, risk management, reducing expenses and the declining value of organisation’s assets all major challenges facing organisations in the sector.

Worryingly, the survey found some organisations reported that the skill levels of their Directors was an issue, with some Directors not financially literate or able to read and analyse finance reports adequately.

The survey also found that females made up only 31% of Finance and/or Audit committee members, with the worst performing industries being Art, Philanthropic, Industry/Trade, Youth and Sporting. In only one industry did female representation on the committee exceed 50%, which was Community, with 50.5% female representation.

The survey confirms that there is a gender imbalance on Not for Profit Boards that Smith says requires immediate attention.

Smith argues that with an average of only 31% women on Finance and/or Audit committees, NFPs cannot guarantee the diversity needed for effective functioning committees.

Smith says the survey findings reflect many of the findings of the recent Federal Government Productivity Commission Research Report into the Contribution of the Not for Profit Sector, released in January of this year.

The Productivity Commission found the current regulatory framework for the sector complex, lacking in coherence, insufficiently transparent and costly.

Smith says this latest research confirms that many NFPs, both small and large, are most definitely struggling under the weight of the current compliance and reporting framework, often to the detriment of the good works they set out to do in the first place.

Scott Phillips, an Assurance Partner with Moore Stephens in Melbourne, says it's clear that reform in the sector is critical.

Phillips says what his company is finding today is that NFPs need to divert more and more scarce resources to compliance and reporting.

Enterprise Care was established in 1988 as a provider of governance advisory services and related products. Moore Stephens is a national network of eight independent firms of business advisors and chartered accountants in all mainland capital cities of Australia.

The report, The Enterprise Care Not for Profit Finance and Audit Committee Report, can be downloaded at http://www.enterprisecare.com.au/upimages/Finance_and_Audit_Committee_Report.pdf
 



FEATURED SUPPLIERS


Helping the helpers fund their mission…...

FrontStream Pty Ltd (FrontStream AsiaPacific)

Brennan IT helps not-for-profit (NFP) organisations drive gr...

Brennan IT

Yes we’re lawyers, but we do a lot more....

Moores

HLB Mann Judd is a specialist Accounting and Advisory firm t...

HLB Mann Judd

More Suppliers

Get more stories like this

FREE SOCIAL
SECTOR NEWS

YOU MAY ALSO LIKE

Simplifying Income Recognition for Not-for-Profit Entities

Wendy Williams

Wednesday, 21st December 2016 at 11:55 am

Not for Profits Tied Up in Knots Over Financial Reporting

Alex Malley

Thursday, 8th September 2016 at 10:08 am

Charity Financial Reporting Faces Regulatory Shake Up

Staff Reporter

Thursday, 6th August 2015 at 11:44 am

Budget Knocks Confidence – NFPs

Lina Caneva

Wednesday, 14th May 2014 at 11:56 am

POPULAR

Red Cross Moves to Wage-Based Fundraising Model

Lina Caneva

Thursday, 16th November 2017 at 8:30 am

Concerns Raised Over New ACNC Board Appointments

Luke Michael

Monday, 20th November 2017 at 2:28 pm

New Same-Sex Marriage Bill Looks to Protect Faith-Based Charities

Luke Michael

Monday, 13th November 2017 at 5:25 pm

Adelaide at the Vanguard of Ending Street Homelessness Globally

Wendy Williams

Tuesday, 21st November 2017 at 8:43 am

Write a Reply or Comment

Your email address will not be published. Required fields are marked *


Good 360
pba inverse logo
Subscribe Twitter Facebook

Get the social sector's most essential news coverage. Delivered free to your inbox every Tuesday and Thursday morning.

You have Successfully Subscribed!