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Checks and Balances The NSCA Story

Checks and Balances The NSCA Story. August 2012. Walking In. $600K Loss YTD (Consolidated) Business Unit $300K of that loss Three employed resources Reputational issues Culture issues. History. How it got to this. The Reckoning. 1988 after 3 years of qualified audit reports

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Checks and Balances The NSCA Story

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  1. Checks and BalancesThe NSCA Story August 2012

  2. Walking In • $600K Loss YTD (Consolidated) • Business Unit $300K of that loss • Three employed resources • Reputational issues • Culture issues

  3. History

  4. How it got to this

  5. The Reckoning • 1988 after 3 years of qualified audit reports • Board never knew qualified • Major Trade Debtors and ‘Containerized Safety Equipment’ • Hopelessly insolvent • Banks - $300M in unrecoverable loans http://www.catchme.net.au/synopsis.html (Trailer 3)

  6. John Fredrich • Not- Australian • No record of entry into Australia • No Birth certificate • Wanted in Germany for embezzlement • Security clearance to every Australian Defence site http://www.catchme.net.au/synopsis.html (Trailer 1)

  7. Aftermath

  8. How could this happen • 4x issues impacting companies limited by guarantee • Halo Effect • Precedential cloning • Statutory rigor mortis • Inappropriate models of regulation

  9. Halo Effect • NFPs – very nature of what they do • Ideals of society – Compassion, Sympathy etc (Good Fundraisers) • Can cause organisations to get lapse (27 Banks) ** • Reduced need for customary caution • Spread to regulators and policy makers • Not for personal gain

  10. Precedential Cloning • Meticulous transfer of British law into Australia • No context considered • The Companies Act 1863 • 1863 adoption in Queensland States • Allowed for ‘Limited’ to be omitted • Opened ability for other states to adopt

  11. Statutory Rigor Mortis • Law and reform enters suspended animation • Judicial – demonstrated by definition of charity • Statutory – underdevelopment of company limited by guarantee • Fear within Australia of antagonizing NFP/Charity (Halo)

  12. Poor Models of Regulation • For-profit regulation inappropriate for NFP • Limited buying power • Regulator focus on large companies • Halo affect

  13. Industry Reform • Australian Charities & Not-for-profit Commission • Regulate Charity/NFP sector more closely • Annual Reporting • Assist entities to meet their obligations • Educate, Guide and monitor compliance • Enforce where necessary

  14. What can you do? MONITOR • Conduct a stress test • Ask for Annual Accounts • Ask questions and creditors • Analyse Cashflow • Determine level of borrowings and ability to repay • How are sales and production trending All available in the annual report

  15. Walking In • $600K Loss YTD • Business Unit $300K of that loss • Three employed resources • Reputational issues • Culture issues

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