Julie-Anne Mee The Australian Centre for Philanthropy and Nonprofit Studies 13 November, 2008

1. 0 Moving closer to a sector specific regulatory framework – solving the Australian not-for-profit accounting muddle. Julie-Anne Mee The Australian Centre for Philanthropy and Nonprofit Studies 13 November, 2008 Perth CPA Not-for-profit Conference

2. Today … • Apples and Pears - Standard Chart of Accounts • Cutting to the Core - Reducing the Costs of Government imposed paperwork

3. Standardisation • Standardisation best described by its benefits • Consistency • Comparability • Sectoral coordination • Communication and discussion • Better info for decision makers • Simpler reporting (by preparers) • Accountability • Robustness

4. Accounting Template • 2002 – 2004: collation of data from Queensland government agencies about grants. • 2004 – 2006: collaborative development of a Standard Chart of Accounts (SCOA) for Queensland • 2nd – 3rd ¼ 2006: training and implementation of SCOA in QLD government funders and nonprofit recipient organisations

5. Accounting Template • 1st – 2nd ¼ 2007: collation of data from New South Wales government agencies about grants and collaborative development of SCOA (using QLD as base platform) • 3rd ¼ 2007: training and implementation of SCOA in NSW funders and recipient organisations • 2006 - 2007: discussions with Federal agencies with FaCSIA as lead agency.

6. Accounting Template • 2007: discussions with Western Australian human services departments • 2007: participation in the Victorian Review of Not-for-Profit Regulation activities and report issued • Late 2007: initial discussions with Tasmanian, South Australian and New Zealand human services departments • Late 2007: updated Queensland SCOA using learnings from New South Wales implementation

7. Accounting Template • 2008: Victorian Action Plan developed after review with project team being assembled during final quarter to implement during early - mid 2009. • 2008: Western Australia Human Services Roundtable endorsement for the Department for Communities to undertake a SCOA project with implementation being recommended during 2009/10 – currently in the middle of this • Senate Economic Committee Inquiry – contributions and review.

8. Advantages of a Standard Chart of Accounts • Consistent and uniform reporting; • True financial performance can be ascertained; • Assists auditors in the annual audit; • Clear guidelines for account names; • Incoming treasurers and bookkeepers have a framework; and • Enables benchmarking and development of KPI’s

9. Financial Reporting Standards and Next Phases • In Australia – sector or transaction neutrality – AASB • Senate Economic Enquiry review • National approach • Funding acquittals align with standards • Accounting and auditing profession engage with nonprofit sector • Appropriate financial literacy training for nonprofit boards and staff rolls out • Research is supported about impact of nonprofit financial performance (eg benchmarking and KPIs)

10. Sample page in SCOA

11. Sample page in SCOA

12. Links for use • CPNS website: http://www.bus.qut.edu.au/research/cpns/ • CPNS wiki space: https://wiki.qut.edu.au/display/CPNS/CPNS+Wiki+Home • WIKI space – Develop Your Organisation (DYO): https://wiki.qut.edu.au/display/CPNS/DYO+Home • WIKI space - DYO – Standard Chart of Accounts (SCOA): https://wiki.qut.edu.au/display/CPNS/Standard+Chart+of+Accounts • WA Wiki specific: https://wiki.qut.edu.au/display/CPNS/Western+Australia

13. Cutting to the Core - Reducing Red Tape • CPNS web site • Summary • http://www.bus.qut.edu.au/research/cpns/documents/2008_4PaperworkReportingCostsofGovtGrants.pdf • Full Paper • Electronic copies of CPNS Working Paper 39: How Long is a Piece of Red Tape? The Paperwork Reporting Costs of Government Grants is available from • http://eprints.qut.edu.au/archive/00012986/

14. 0 Compliance Costs • Compliance Pilot Survey • For a one year period, the project surveyed 20 nonprofit organisations on their compliance costs in formulating submissions, reporting, and other government paperwork. • Variations in size, purpose & multiple funders • NPOs kept a log of all government documentation and further 2 page survey. • 14 NPOs remained for the whole 12 months.

15. 0 Summary Over the 12 months: An average of 143.57 hours (median of 95 hours) to complete government generated paperwork. Average time taken per form was 5.05 hours, but with a median of 1.00 hour. Pre Survey views: Estimates were much higher and this has implications for government red tape review

16. The fourteen NPOs completed: • 46 grant submissions (on average taking 15.17 hours to prepare); • 157 grant acquittals (average 6.04 hours per acquittal); • 90 tax forms (average 1.87 hours per form); and • 111 ‘other’ forms, e.g. database information on client services for Health or Disability departments (average 1.88 hours). • Grant submissions and acquittals, together made up just over 50% of all compliance paperwork for NPOs.

17. Form Issues • Less than 50% of forms had instructions/guides • Only one third provided a contact point • Limited use of external advisors to complete forms • Time constraints in appln. & external audit issues

18. 0 Department Analysis

19. Some Suggestions…. • Whole of Government data dictionary • Collect data once • Data collected should be either useful or returned as useful information • Communication about the fate and reasons of failed submissions needs improvement • Include adequate instructions and a contact point . • One size does not fit all • Government should examine its funding submission processes • Further research on benefits of red tape reduction measures • Further quantitative research is required into the burdens and benefits of statutory mandated quality accreditation processes • Further research into the non-paperwork burden of government regulation.