The NFP Advisor | Issue 1

thenfpadvisor

NFP financial reporting, establish governance processes within Protecting your NFP against
governance and banking NFPs to meet the obligations of the fraud 
ACNC. Finally, Campbell reminded all
Bentleys NSW was delighted to host attendees of the Safe Harbour rules and E mployee dishonesty, or fraud, can
the options to avoid insolvent trading.
the governance and financial reporting be hard to manage because people
update for over 40 Directors, CEO’s Ashley Johns was our final speaker who commit fraud make a conscious
and finance staff from the not-for-profit for the event who outlined the key effort to deceive by concealing their
sector (NFP) on Monday 3 June 2019 importance of NFPs in our society activities. Some frauds are one-off
at our Sydney office. and the economy and how Westpac opportunistic events, others can go
is investing in the NFP sector. Ashley on for years undetected because the
The update which was moderated by provided a step by step approach on organisation has ineffective, poorly
Bentleys NSW’s NFP specialist director how to best present a NFP to the bank designed and, or, poorly understood
Bob Evett featured leading NFP experts to secure lending. processes and controls.
Carmen Ridley, Principal, Australian
Financial Reporting Solutions: Campbell Bentleys NSW would like to thank Three things are widely recognised as
Hudson, Partner, Dentons; and Ashley all speakers for providing attendees giving rise to fraudulent activity.
Johns, Chief Credit Officer, Queensland, with practical and thought-provoking
Westpac Commercial Banking. sessions to help everyone better • Personal pressure: mounting
manage their NFP. Additionally, we debts or other financial pressures
Carmen, a Board member of the would like to thank all attendees for in a person’s life can motivate
Australian Accounting Standards making time in their busy schedules to them to do things they wouldn’t
Board, focused on key changes to participate in the discussions following normally do, such as steal from
the methodology for accounting for each presentation. their employer
revenue and leases and how these
can be practically applied. In regards Carmen Ridley • Opportunity: a work place that
to revenue, Carmen identified the Principal | AFRS doesn’t have adequate systems
differences between AASB 15: Revenue and processes to protect dishonest
from contracts with customers and Campbell Hudson behaviour presents an ideal
AASB 1058: Income for not-for profits. Partner | Dentons opportunity for fraud
On leases, Carmen explored the
capitalisation of leases onto the balance Ashley Johns • Rationalisation: individuals can
sheet under AASB 16: Leases and Chief Credit Officer | easily justify their actions with
the practical approach to applying the Westpac beliefs such as...”It’s just a loan, I’ll
standard. pay it back as soon as I can”, or...”I
If you need more information on deserve something extra, no-one
Campbell took an in depth look at any of the topics mentioned above appreciates how hard I work”.
the personal liability implications please feel free to contact Bob
for directors and, in particular, NFP Evett, Director, Audit or Greg Bell,
directors post the Banking Royal Client Director, Audit, Bentleys
Commission environment. Campbell NSW on 02 9220 0700.
drew on his years of experience
advising NFPs on how to practically

Case study | Recently Bentleys was • Step-by-step procedures for Increasingly in our digital world
brought in to investigate a fraud in key business practices, such as additional security measures are
a NFP that had been perpetuated accounts payable, are a must. required because employees have keys,
over a substantial period costing the Good procedures help people to access codes and IT system logins.
organisation millions of dollars. In know what’s expected of them
this case the fraudster had complete while providing a baseline for Unless organisations are vigilant in
control of the acquisition and disposal monitoring business performance. managing these, security may be
for fixed assets for the organisation. compromised rather than strengthened.
Whilst the organisation had apparent • Commit to good recruitment Don’t ever use generic logins or access
oversight controls for the process (e.g. practices including background codes.
Purchase Order approvals) it had a checks for new employees and
poor understanding of the process proper organisational induction. Conclusion
and placed significant parts of the
processes design and control in the The right work place culture is also To ensure that your organisation is
hands of the fraudster. needed to limit the chance of fraud. implementing the most efficient and
Owners, managers and supervisors effective processes that is attuned to
If you think that there is any must role-model desired behaviours fraud prevention it is appropriate to
suspicious activity occurring within and have a visible presence in the discuss and review them with your
your organisation please contact business. If they’re not vigilant, no one Bentleys advisor. Bentleys will provide
your Bentleys advisor immediately. else will be. details on the latest issues that could
The Bentleys team will conduct a affect your business as well as the best
forensic analysis of your records, • Establishing and following fraud strategies to address those issues.
procedures and systems, to give prevention procedures should be
you peace of mind. non-negotiable. Make sure it’s The role of boards in the NFP
reflected in everyone’s induction, sector
There are many things organisations ongoing training and regular
can do to reduce opportunities for feedback. Managers should A fter the recent review of the NFP
fraud. It is important that you work with periodically audit compliance
your advisors to ensure you have the – there is no point waiting for sector performance by the Australian
right measures and systems in place. something to go wrong. Charities and NFP Commission (ACNC)
Some quick ideas include but are not it is clear that all NFP boards need to
limited to: • Often other people in the business play their role in demonstrating good
know that dishonest behaviour is governance.
• Ensure reconciliation of financial occurring. Establish an appropriate
transactions is incorporated into ‘whistle blower’ mechanism for NFP boards need to exercise diligence
daily work practices. For example, staff to report any concerns and in driving strategic change, and to
checking that ‘sales’ totals match ensure employees have access to ensure the organisation is focussed on
with cash, cheque and EFTPOS adequate support programs. delivering its stated community benefits
receipts. Similarly, always reconcile in a fiscally sustainable manner.
bank statements against the figures • Finally, be on the lookout for
recorded in the business’ financial suspicious or irregular activity such Recognition and implementation of the
records. as: new ACNC regulatory framework and
–– An invoice price differs from the associated governance requirements by
• ‘Segregation of duties’ is essential amount approved for purchase Australia’s 55,000 registered charities
for combating fraud. It’s about will serve to build confidence in this
putting the right checks and –– Lost receipts for credit card important sector.
balances in place so that no one transactions
person has complete control over There are numerous and important
a single process. E.g. While Kate –– Negative inventory entries responsibilities imposed on directors
is responsible for paying suppliers, that are legal requirements. For
she is unable to enter the supplier’s –– Unauthorised bad debt write- example, Directors have a responsibility
details in the computer system. That offs to exercise their powers and discharge
way, she can’t divert payment to their duties with due care, skill and
another bank account by altering the –– Excessive employee overtime diligence; acting in the best interests of
supplier’s details. Similarly, while John the company, and for a proper purpose.
is responsible for entering supplier –– Unexplained access to
details into the system, he has no buildings or system
access to the payment process.
–– Employees with excessive
leave balances (ie. they dont
take holidays)

The board must be conscious that How can abuse or neglect be identified, Boards must be actively involved
it sets the tone and direction of the or avoided? in decision making across the
NFP and they are also accountable organisation, and for this they need
for performance. A well implemented It is also important that the board aligns reliable and timely information and
governance framework and sound resources with a culture that delivers advice from management.
business plan can help the board to the quality and type of services desired If you would like assistance in
establish guidelines that protect an by its community and stakeholders. interpreting financial data and or an
organisations reputation, allocate Sometimes a review and reinvention audit of your current policies and
resources efficiently and demonstrate of a culture is required if the existing processes Bentleys can help you.
better practices that are of value to culture does not support the quality
its community. This strategy must be or type of service your organisation If you need more information on
owned by the board, but actioned by aspires to deliver. any of the topics mentioned above
the executive. please feel free to contact Bob
Governance is: Evett, Director, Audit or Greg Bell,
If the executive and board are not Client Director, Audit, Bentleys
actively managing the strategy, 1. Accountable NSW on 02 9220 0700.
compliance requirements and risks
of the organisation, they may require 2. Transparent FRAUD
the assistance of an advisor to
independently assess or audit policies 3. Law abiding PREVENTION
and procedures. The advisor will then STRATEGIES.
recommend changes and a new 4. Responsive and proactive
methodology of how to establish a 8.30-1130am
framework for the ongoing improvement 5. Effective and efficient Tues. 24 Sept.
in managerial and board performance.
Without good governance organisations Speakers.
An effective governance framework can suffer pitfalls with severe
challenges organisations to consequences. Bob Evett | Greg Bell
demonstrate that strategy and
outcomes are being delivered at Tell-tale signs that a board is going to Aaron Dearden
optimum levels, while maintaining and fail can include:
adhering to all necessary legislation and Gabriel McDowell
regulations. An effective governance • Insufficient or inaccurate
framework should demonstrate: information at Board level; Nigel Sanderson

• contribution of individual directors; • Board members failing to attend For more information or to rsvp
meetings or failing to read board visit bentleys.com.au/events.
• effectiveness of the board papers;
performance;
• Ignoring failures, choosing not to
• how governance is applied analyse causes and issues;
throughout the organisation; and
• Lack of response to community
• the strength of the relationships changes and changing consumer
the organisation fosters with its needs;
stakeholders.
• Mismanaged risk and wrongly
Boards need to ask themselves assumed risk tolerance;
if they have the appropriate skills,
diversity, and operational and executive • Negative organisational culture; and
resources to implement and sustain the
strategy it has set. Do they have the • Lack of board expertise in relevant
appropriate levels of reporting required industry, diversity or limited board
to make informed decisions based skill sets.
on pre-determined key performance
indicators? How will Directors know Greater boardroom accountability and
if the organisation is living up to its diligence will ensure that organisations
purpose and values? How are internal are well run and able to serve the
and external complaints managed? community they claim to represent with
the services they need and want.

The conclusion is that effective and best
practice corporate governance is about
more than policies and procedures.

About us.

Bentleys NSW is a full service, mid-tier chartered
accounting firm. We are part of the Bentleys Network,
a national association of Australian owned and
independently run accounting, audit and advisory firms.
Bentleys NSW, has eight Directors and more than 70
professional staff. We provide a comprehensive range of
accounting and assurance services.

Bentleys NSW cares for our community. We work closely with
many NFP clients like charities, education providers, aged care
operators, disability services, professional associations, unions,
Indigenous corporations, and religious organisations.

Are you a NFP?
Contact us today.

Bob Evett | Director Greg Bell | Client Director
[email protected] [email protected]

A member of Bentleys, a network of independent
advisory and accounting firms located throughout
Australia, New Zealand and China that trade as
Bentleys. All members of the Bentleys Network are
affiliated only and are separate legal entities and not
in partnership. Limited liability by a scheme approved
under Professional Standards Legislation. Bentleys
is a member of Allinial Global – an association of
independent accounting and consulting firms.

Level 14, 60 Margaret Street Sydney 2000
Telephone +61 2 9220 0700 | Facsimile +61 2 9220 0777

[email protected] | bentleys.com.au