Quality Principle 8. Resource Management

Development and humanitarian organisations acquire, manage and report on resources ethically and responsibly.

Rationale

Quality Principle 8 recognises the importance of building trust with all stakeholders through the good management and use of resources. It includes member requirements regarding fundraising and financial management. The Compliance Indicators that relate to financial management and reporting have been developed in close consultation with the CCC to streamline current obligations wherever possible while also ensuring that requirements are clear and accommodate the diversity of ACFID Members.

Fundraising activities are often the public face of our organisations. The application of ethics in fundraising is not only a requirement but also an opportunity. It provides the means to enter into ongoing relationships of trust with donors, supporters and volunteers and, most importantly, with the beneficiaries of the funds raised. Member organisations’ commitment to the values of their organisations and the values of the Code of Conduct will be displayed through fundraising activities. It is the right of our donors to know these are upheld. Furthermore, the dignity of donors must be respected and they should be viewed as participants in the mission of our organisations.

Australia has a complex regulatory system for fundraising which differs for each state and territory. Member organisations must be aware of and comply with these legal requirements through the development of appropriate internal processes and procedures.

In relation to the fundraising aspects of this Quality Principle, the Code includes reference to the ‘ACFID Fundraising Charter’ that has been developed alongside the proposed Code. The ACFID Fundraising Charter consolidates fundraising standards for ACFID Members. It has been developed in response to ongoing discussion within the sector on how to ensure and communicate a common understanding of fundraising standards. The Fundraising Charter was drafted by ACFID through consultation workshops and with input from the Images and Messages Community of Practice.

The Code of Conduct also places significant emphasis on financial management and reporting.  The need for irreproachable management and application of donated funds and transparent, easily comparable financial reporting are central to the credibility of aid and development organisations. The Compliance Indicators and Verifiers that relate to financial matters are therefore more prescriptive than for many other parts of the Code.

Quality Principle 8 is implemented through three Commitments by ACFID Members.

Commitments

Commitment 8.1 We source our resources ethically.

Compliance Indicators

Compliance with the Commitments will be assessed against the following Compliance Indicators. All of the applicable Compliance Indicators must be met by every ACFID Member to be considered compliant with the Code. Each of the Compliance Indicators has one or more compliance Verifiers. Verifiers are the description of evidence that is required to substantiate compliance with each Compliance Indicator. Guidance is also provided. 

8.1.1 Members have organisational standards for the acceptance of donations

Verifier

Policy, statement, guidance document or governing body decision outlining the conditions that must be satisfied in order to accept or reject a donation.

Guidance

The purpose of a policy, statement, guidance document or governing body decision is to assist your organisation to make clear and consistent decisions regarding the acceptance or refusal of donations. Developing a position on what donations your organisation will and will not accept ensures that your organisation is able to maintain its independence from donor influences. It protects the interests and reputation of your organisation and minimises the risk of any adverse publicity that may result from the acceptance of a particular type of donation.

The relevant document would normally state that the organisation may accept a donation for a specific activity conducted by the organisation provided that the activity is directly related to the organisation’s objects; and is practically achievable by the organisation. It would also list possible reasons for refusing a donation such as incompatibility between a donor's activities or policies and those of the organisation. Further guidance in this area is provided by the Fundraising Institute of Australia, which has a Code of Acceptance and Refusal of Donations and can be found in the Resources section.

8.1.2 Members report their compliance with the ACFID Fundraising Charter annually to their own governing body.

Verifier

The ACFID Fundraising Charter

The ACFID Fundraising Charter requires that Members will have processes and procedures in place to ensure that:

  • Decisions to accept or reject donations support the purpose of the organisation.
  • Legislative requirements for fundraising are met.
  • The privacy of Donors, consistent with the Privacy Act, are met.
  • Free, prior and informed consent is obtained for all images and stories.

All fundraising materials will be truthful and:

  • Include the organisation’s identity including name, address, ABN and purpose.
  • Accurately represent the context, situation, proposed solutions and intended meaning of information provided by affected people.
  • Clearly state if there is a specific purpose of each donation.
  • Avoid material omissions, exaggerations, misleading visual portrayals and overstating the need or what the donor’s response may achieve.

If outsourcing fundraising activities, Members will ensure that:

  • Contracts are in place which meet all relevant legislative and regulatory requirements.
  • Specific expectations, responsibilities and obligations of each party are clear and in writing.
  • Members are identified as the beneficiaries of the funds.
  • Contractors are clearly identified.

Images and messages used for fundraising will not:

  • Be untruthful, exaggerated or misleading (e.g. not doctored, created as fiction or misrepresenting the country, etc.).
  • Be used if they may endanger the people they are portraying.
  • Be used without the free, prior and informed consent of the person/s portrayed, including children, their parents or guardians.
  • Present people in a dehumanised manner.
  • Infringe child protection policies and in particular show children in a naked and/or sexualised manner.
  • Feature dead bodies or dying people.
     

8.1.3 Members have organisational standards for the procurement of goods and services.

Verifier

Policy, procedure or guidance document that commits the Member to ethical procurement procedures.

Guidance

Guidance for Members to develop ethical procurement procedures can be downloaded from the Resources Section below. 

Good Practice Indicators

The following Good Practice Indicators describe a higher standard of practice than that set out in the Compliance Indicators. While Members do not need to meet the Good Practice Indicators to be considered compliant with the Code, they will self-assess against these indicators once every three years. This provides a clear pathway for Members to strengthen and improve practice over time.

  • Qualified and experienced staff for raising funds/resource mobilisation are in place. 
  • Training is provided for key personnel on the ACFID Fundraising Charter and the Fundraising Institute of Australia’s Principles & Standards of Fundraising Practice and Professional Development.
  • Commitment to the ACFID Fundraising Charter is promoted to the public and external stakeholders. 

GUIDANCE AND RESOURCES 

Good Practice Guidance

Here are some practical suggestions for your organisation to further deepen and improve practice over time. 

Legislative and regulatory obligations

  • Be aware of and understand your organisation’s legislative and regulatory obligations in relation to fundraising.
  • At the federal level, these are established through the Australian Charities and Not-for-profit Commission (ACNC). Check the ACNC website regularly for reference and to keep abreast of any new developments. 
  • At the state level, these are established through different government bodies in each state and territory. Check the ACNC website or the Fundraising Institute Australia website for up-to-date contact details of the relevant government bodies in each state and territory. 
  • The Not for Profit Law Information Hub also provides an overview on fundraising regimes operating within Australia and associated legal requirements.
  • Establish a register within your organisation to keep track of all federal and state registrations and obligations for fundraising purposes.
  • Assign responsibility within your organisation to regularly check your obligations and to ensure you have the required certificates or permissions for different types of fundraising in different states.

Ethical and Good Practice

  • Create and document your organisation’s policy, approved by your governing body, on accepting donations, as consistent with your organisation’s ethics, mission, goals and existing programs.
  • Be aware of and comply with the Fundraising Institute Australia’s Code of Ethics and Professional Conduct (see References and Resources). FIA is the national peak body representing professional fundraising in Australia.
  • Ensure your fundraising programs are consistent with the FIA Code of Ethics and Professional Conduct (see References and Resources below). FIA is the national peak body representing professional fundraising in Australia
  • Make sure your fundraising practices and activities are consistent with each of the aspects of practice as outlined by the FIA
  • Ensure each method of fundraising used by your organisation is consistent with the relevant FIA Standards of Fundraising Practice
  • Utilise the FIA website to access training opportunities and resources on ethical fundraising.
  • Ensure face to face fundraising is consistent with the Public Fundraising Regulatory Authority Standard

Resources

Commitment 8.2 We ensure that funds and resources entrusted to us are properly controlled and managed.

Compliance Indicators

Compliance with the Commitments will be assessed against the following Compliance Indicators. All of the applicable Compliance Indicators must be met by every ACFID Member to be considered compliant with the Code. Each of the Compliance Indicators has one or more compliance Verifiers. Verifiers are the description of evidence that is required to substantiate compliance with each Compliance Indicator. Guidance is also provided. 

8.2.1 Members can control and manage their financial resources and risks.

Verifier

  • Policy, procedure or guidance documents that address:
    • Risk management and control mechanisms.
    • Financial wrong-doing, especially fraud, corruption, counter-terrorism and money-laundering and violation of sanctions imposed by the Australian
    • government.
    • Checks of individuals and organisations receiving funds against the Criminal Code list of terrorist organisations and the DFAT consolidated list of individuals and entities subject to targeted financial sanctions.
    • Appropriate and effective internal controls.

Members are required to extend the financial wrongdoing requirements of this compliance indicator and verifier to partners through MOUs or similar

Guidance

Having a policy, procedure or guidance document that outlines a Member's financial systems and controls is very important to help ensure it runs effectively. The ACNC has developed a basic guide to setting up financial controls, which can be found in the resources section.

Tools4Development have a how-to-guide to prevent fraud and the ACNC has a briefing page for NGOs working overseas which addresses fraud. These can both be downloaded in the Resources Section below.

ACFID has also developed guidance for developing a financial wrong doing policy that addresses fraud, counter terrorism, money laundering and violation of sanctions, which can be found in the resources section. There is also further guidance on risk management at Compliance Indicator 4.2.2.

Members should also refer to the World Bank Listing of ineligible firms and individuals, the Asian Development Bank Sanctions List; the Attorney General’s Department List of Terrorist organisations; and DFAT’s consolidated list of individuals and entities subject to targeted financial sanctions, including relating to terrorism.

8.2.2 Members are effective in their use of resources and minimise financial wastage in the planning and implementation of activities.

Verifier

  • Evidence of consideration of costs, during activity planning, implementation and review, including alignment with strategic and good practice approaches for efficiency and continuous improvement.

Guidance

Evidence of consideration of costs will take multiple forms and will vary between members. Examples might include budgeting processes, procurement policies and processes, financial acquittal processes, the use of volunteers and in-kind services, travel policies, delegations and expenditure approval processes.  Policy templates and guidance in these areas of financial management are included in the Resources Section below. 

8.2.3 Members undertake measurement, analysis and review of financial performance and financial position.

Verifier

  • An accounting system that is appropriate to the Member’s operational, legal and structural requirements, and is adequate to the scale, capacities and risks of the organisation.
  • Detailed accounting records that are structured to enable forecasting, measurement and review of income, expenditure, assets, liabilities and equity.

Guidance

Members should implement systems that are appropriate to the size and capacity of your organisation. A large, sophisticated signatory organisation would be expected to use accounting software in its financial management, and have documented policies, controls and systems. It may have dedicated financial staff, monthly management reports, internal websites, an audit committee and internal audit functions. A small signatory organisation may keep largely manual or spreadsheet-based accounts and rely, in part, on honorary officials in its financial management. It may have one staff member or volunteer accountable for finances, an honorary treasurer, and quarterly meetings of a committee or the Board to oversee the processes. Providing the arrangements are demonstrably appropriate to the risk, they would be compliant with this Code.

8.2.4 Members produce and publish annual audited financial statements.

Verifier

Members must have all of the following in place:

  • Full financial reports that comply with accounting standards
  • ACFID-Code-compliant financial statements (see 8.3.2) which are independently audited by a qualified accountant in accordance with relevant Australian auditing standards.

The audit report that specifically relates to the full financial report must:

  • Accompany the full financial report.
  • Be signed by the auditor and include their identity, qualifications and contact
  • details.

The audit report that specifically relates to the Code of Conduct Summary Financial Report must:

  • Be included in the Annual Report.
  • Be signed by the auditor and include their identity, qualifications and contact details.

Members who do not include their full financial reports in their Annual Report will need to have two audit reports;

  • One for the ACFID Code-compliant financial statements in the Annual Report
  • One for the full financial reports.

The auditor will be, at a minimum, a qualified accountant who is a Member of the CPA Australia, Chartered Accountants Australia and New Zealand, or the National Institute of Accountants, or be a registered company auditor.

Guidance

ACFID’s Mandatory Guidance on Financial Reporting can be found in the Resources Section below. 

8.2.5 Members undertake due diligence assessments of partners who manage funds on behalf of the Member.

Verifier

A documented due diligence process which:

  • Assesses the partner’s capacity to apply funds or resources in accordance with the promise to the donor, the Member’s strategy, and the specific
  • instructions of the Member.
  • Includes reference to prohibited entities listings.
  • Assesses the partner’s capacity to manage and control funds.

Guidance

Undertaking due diligence and capacity assessments is a mechanism that enables Members to identify potential risks and inform their approach to working with partners. An example assessment can be found in the resources section.  

Good Practice Indicators

The following Good Practice Indicators describe a higher standard of practice than that set out in the Compliance Indicators. While Members do not need to meet the Good Practice Indicators to be considered compliant with the Code, they will self-assess against these indicators once every three years. This provides a clear pathway for Members to strengthen and improve practice over time.

  • Qualified staff with responsibility for financial management and oversight are in place.
  • Regular analysis of internal systems is undertaken to identify areas that need to be monitored and updated.
  • Regular training is provided to partners and staff on financial policies, in particular financial wrongdoing prevention.
  • Organisation governing body formally reviews income and expenditure on at least a quarterly basis.
  • Adequate funding reserves exist to protect staff and partners in the event of a reduction in funding, and a policy is in place to reflect this.

GUIDANCE AND RESOURCES 

Good Practice Guidance

Here are some practical suggestions for your organisation to further deepen and improve practice over time. 

Accounting Systems

  • All signatory organisations must have accounting records and systems that are capable of reliably producing the required reporting, and supporting the controls and other requirements of this Code. Within this requirement, develop accounting records and systems that suit your operational, legal and structural requirements, and are adequate to the scale, capacities, and risks of the organisation.
  • Undertake a risk analysis of internal systems to identify areas of your organisation that need to be monitored and protected. Determine where possible risks to these areas exist, and implement controls to manage these risks. 

Managing funds

  • Put appropriate controls, policies and procedures in place to ensure funds are managed and invested well and to protect the value of funds or resources that have been donated or provided to your organisation.
  • In some states of Australia, charitable collections legislation requires that funds that are not immediately applied to the purpose or object of an appeal must be held or invested in the manner of a trust fund. This has the effect of requiring those responsible for holding or investing the funds (for example the directors of the signatory organisation company) to act as if they were trustees of such funds.
  • There are some requirements for signatory organisations that operate a gift fund that is endorsed by the Australian Taxation Office. The requirements for Overseas Aid Gift Deductibility are outlined in Tax Ruling 95/2, available on the Australian Taxation Office’s website. 

Financial Controls

  • Internal financial controls are systems of policies and procedures that safeguard assets, ensure accurate and reliable financial reporting, promote compliance with laws and regulations, and achieve effective and efficient operations.
  • These systems relate not only to accounting and reporting but also to internal and external communication processes, staff management and error handling.
  • Create and document a policy and procedures manual that may cover the following:
    • Handling receipts and expenditure of funds
    • Budgeting and forecasting of activities
    • Preparing appropriate and timely financial reporting to board members and senior management
    • Conducting the annual external audit of your financial statements and Annual Report
    • Evaluating your organisation’s performance
    • Evaluating staff and programs
    • Maintaining inventory records of property (including fixed assets and stock)
    • Implementing personnel and conflict of interest policies.  

Financial management

  • Develop budgets appropriate to your organisation’s activities
  • Undertake regular financial reporting against budgets including budget variance analysis
  • Undertake regular financial reconciliations and corrective action to resolve differences and to ensure the accuracy and completeness of transactions
  • Regularly review financial information against budgets, forecasts, prior periods or other benchmarks
  • Implement systems that allow accurate cost analyses of your activities
  • Segregate financial management duties among different people to reduce the risk of error or inappropriate action
  • Create and document a procurement policy
  • Provide training and build the financial management capacity of staff
  • Undertake periodic internal audits that focus on efficiency.

Organisational management

  • Regularly review finances by the governing body and management
  • Undertake organisational and program level risk assessments
  • Benchmark administration and remuneration costs against other organisations in the sector
  • Undertake staff performance reviews
  • Develop, document and implement policies on:
    • Whistle-blowing
    • Fraud prevention
    • Travel and accommodation
    • Remuneration
    • Conflict of interest
    • Value for money

Related Party Transactions

  • Avoid internal loans or other financial transactions with related parties in general as they are difficult to justify to external stakeholders and invite criticism and suspicion.
  • A ‘related party’ may include your governing body members and staff, and their immediate families, and companies that they control. A ‘related party transaction’ is therefore a transaction with someone who has a close, and possibly privileged, relationship with the signatory organisation. For a more precise definition of related parties, refer to Australian Accounting Standard AASB 124 Related Party Disclosures.
  • Where there may be justifications to permit these transactions, there must be clear policies allowing them, and processes to record them. Full disclosure of these transactions should be provided in the Annual Report.
  • All signatory organisations are expected to reach the same standard of implementation, irrespective of their size.

Corruption, fraud and bribery

  • The governing body and executive should establish a high-level commitment to a zero tolerance approach to fraud and corruption
  • Create and document an anti-fraud and anti-corruption policy or separate policies, approved by the governing body.
  • Create and document procedures for implementing the policy and ensure that governing body members, staff and partners are familiar with them. The procedures should include the following:
    • Recruitment practices which include due diligence on prospective employees
    • Due diligence assessment of partners and key third party suppliers
    • Regular training for staff and partners to raise awareness of the risks associated with fraud and corruption, mitigation strategies and the organisation’s relevant policy and procedures
    • Risk analyses in each country of operation including Australia
    • Reporting procedures, including the requirement to report without delay all cases of alleged, suspected or detected fraud or corruption
    • All cases of alleged fraud or corruption to be handled in a confidential, prompt and professional manner
    • The requirement for independent audits, delegations, financial management, internal controls, accounting and cash handling procedures to minimise the risk of fraud
    • Ongoing monitoring to ensure compliance with anti-fraud / anti-corruption policies and any related procedures
    • The prohibition of undocumented transactions or loans to governing body members or staff
    • The process to deal with allegations of wrongdoing
    • Procedures to pursue the recovery of proceeds of fraud and apply prosecutorial or administrative action
  • Create and document a policy that facilitates complaints and whistle blowing in cases of fraud and corruption, with a clear referral procedure that allows reporting to a member of the governing body, and a confidential and independent review process.
  • Undertake a thorough risk analysis in each country of operation (including Australia) so that your analysis is context-specific.
  • Document the assessment and identification of risk and risk mitigation strategies in a risk framework or equivalent.
  • Ensure risk assessments explicitly consider the risks associated with wrongdoing, corruption, fraud, bribery or other financial impropriety and consider the specific procedures that your organisation has in place regarding decision-making, financial management and reporting.
  • Communicate your organisation’s zero tolerance approach to fraud and corruption and all relevant policies and procedures to internal and external stakeholders, through orientation for staff and partners and promotion through publicly available materials such as websites.
  • Undertake training and awareness programs to ensure staff and partners are aware of potential risks, policies and procedures to prevent and mitigate risks, and reporting procedures.
  • Undertake periodic reviews of anti-fraud and anti-corruption policy and procedures and report outcomes to the governing body. Organisations that are exposed to higher risks should consider external verification and assurance of their anti-corruption procedures.
  • Identify and appoint a senior staff member with whom other staff can discuss issues and situations when they arise. Or you may choose an external contactor to address corruption, such as the ACFID Code Secretariat Management Team, or an organisation such as STOPline that specialises in whistle-blower protection services.
  • Undertake comprehensive due diligence assessments of all current and potential partners and key third party suppliers to assess the robustness of their practices and operations, their policies and general approaches to anti-fraud and anti-corruption, internal financial management, procurement and reporting procedures
  • Include anti-fraud and anti-corruption clauses in all partnership and third party supplier contracts
  • Provide training for partners where necessary to ensure their awareness of the risks associated with fraud and corruption and local legal and regulatory obligations
  • Undertake periodic reviews of partners’ internal financial management, procurement and reporting procedures and, where possible, those of key third parties which your organisation engages with.

Cost consciousness

  • Cost consciousness is a term that relates to an awareness of costs and how they can be contained or reduced. Consider the most effective use of resources in all organisational practices including planning, operations, evaluation, finances and program management
  • Define what an effective use of resources means for your organisation and context. Examples of practices that demonstrate cost consciousness include:
    • Using pro bono corporate services
    • Travel policies that encourage fare comparisons and early bookings
    • Accommodation policies that specify reasonable rates
    • Employing local consultants and staff wherever appropriate
    • Minimising travel costs by using telephone and web conferencing where appropriate 

Resources

Commitment 8.3 We report on the acquisition and use of our resources.

Compliance Indicators

Compliance with the Commitments will be assessed against the following Compliance Indicators. All of the applicable Compliance Indicators must be met by every ACFID Member to be considered compliant with the Code. Each of the Compliance Indicators has one or more compliance Verifiers. Verifiers are the description of evidence that is required to substantiate compliance with each Compliance Indicator. Guidance is also provided. 

8.3.1 Members publish an annual report.

Verifier

The Annual Report must include:

  • A description of the signatory organisation’s purpose, objectives/aims and values.
  • A description of the most significant aid and development activities undertaken during the reporting period and their impact.
  • Information about evaluations into the effectiveness of, and the learning from, aid and development activity conducted by the organisation.
  • A report by the management and/or the governing body.
  • A plain-language summary of income and expenditure and overall financial health.
  • A statement of commitment to full adherence with the ACFID Code of Conduct

Guidance

An Annual Report need not be lengthy, nor need it be of elaborate production quality.  The extent of the Annual Report should be appropriate to the signatory organisation’s circumstances.  It does not need to be produced as a hard copy document but must be available on the organisation's website.

The Annual Report may be published in electronic form, via email or on the signatory organisation’s website, provided:

  • Members and stakeholders are alerted to its publication
  • The Annual Report meets the standards expected by the Code
  • A printable copy is available on request
  • The Annual Report is easily accessible and it is of reasonable file size for downloading
  • The Annual report is easy to find on the website.
  •  
  • An Annual Report need not be lengthy, nor need it be of elaborate production quality. The extent of the Annual Report should be appropriate to the signatory organisation’s circumstances.
  • Signatory organisations should ensure that the Annual Report submitted reflects the legal entity that is a signatory to the Code.
  • The ACFID logo is available on the ACFID website for signatory organisations to include in their Annual Report as a symbol of quality and accountability to stakeholders.
  • The Annual report can include references to an international parent body, affiliation, or similar.
  • Descriptions of the most significant aid and development activities should cover more than activity and inputs.  It should also include information on outputs, results and outcomes where available.  For example, “We drilled 20 wells which improved the lives of 1000 people in the region by providing access to clean drinking water.  In turn, this lowered the incidence of water borne disease by 50% and reduced the infant mortality rate by 75%.”  You can also explain impacts of activities by explaining how they contribute to the achievement of goals in your strategic plan.
  • Information about evaluations in to the effectiveness of, and the learning from, aid and development activity conducted by you is about showing your commitment to continuous improvement.   You can identify and show learnings from formal evaluations, routine monitoring, reflection or even just from the experience of doing that have led or may lead to changes in your operations or strategies. 
  • A plain language summary of a signatory organisation’s income and expenditure and overall financial health can include the following:
    • Discussion and analysis on overall financial performance and position for the year;
    • Revenue stream – discussion and analysis on main streams of revenue, any movements in revenue, factors affecting revenue for the reporting year and future years as applicable;
    • Expenditure stream – discussion and analysis on expenditure stream by reporting categories e.g. program expenditure by regions/projects, community education, fundraising costs, accountability and administration etc. as applicable.
    • These discussions can be enhanced by the inclusion and analysis of financial ratios such as:
    • Accountability and Administration Expenditure ratio (total accountability and administration expenditure/total expenditure);
    • Program Expense ratio (total program expenses/total expenditure);
    • Fundraising Expense ratio (total fundraising costs/total expenditure);
    • Cost of Fundraising ratio (total fundraising costs/total fundraised revenue.
    • Charts or graphs that provide information about the composition of the signatory organisations assets or information about revenue or expenses over a period of time.

The objective of these and other financial ratios is to help show how efficiently a signatory organisation has used their resources

8.3.2 Members publish annual ACFID-Code- compliant financial statements in their Annual Reports.

Verifier

All Members must publish ACFID-Code-compliant financial statements in their Annual Reports which include:

  • An auditor's report that refers to the Code-compliant Financial Statements.
  • Comparative figures for the previous reporting period.
  • A note stating that the ACFID-Code-compliant financial statements comply with the presentation and disclosure requirements of the ACFID Code of Conduct and refers readers to the ACFID Code of Conduct website for further information
  • A declaration by the Governing Body stating that the financial statements are in accordance with relevant legislation, accounting standards, provide a true and fair view of their financial position and performance, and that the organisation can pay its debts as and when they become due (for Members that are companies or trustee companies only).
  • Review and approval of the Member’s financial statements by the Member’s governing body.

Members whose consolidated entity international aid and development revenue is below $250,000 must publish Financial Statements in Australian dollars and include:

  • An Income Statement in Option 1 Format.

Members whose consolidated entity international aid and development revenue is above $250,000 must publish Financial Statements in Australian dollars and include the following:

  • An Income Statement in Option 2 format.
  • A Balance Sheet based on Australian Accounting Standard AASB 101
  • Presentation of Financial Statements.
  • A Statement of Changes in Equity (for Members that are companies or trustee companies only).

If Members publish their full statutory financial statements separately from their Annual Report, a reference to the availability of the full statutory financial report must be included in the Annual Report.

The Annual Report, including the ACFID Code-compliant financial statements, must be made available to the public via the Member’s website.

Guidance

ACFID’s Mandatory Guidance on Financial Reporting can be found in the Resources Section below. 

8.3.3 Members fully and accurately disclose administration costs and costs of any public fundraising.

Verifier

  • Any financial reports do not inaccurately claim zero expenses or otherwise understate the amount spent on public fundraising and administration and/or overstate development expenditure.
  • If reporting financial ratios, Members will apply ACFID’s Financial Definitions in their calculations and accompany any use of ratios with a note explaining how these have been determined.         

Guidance

This Compliance Indiactor requires your organisation to truthfully and transparently disclose all costs incurred in the donation program.

In your organisation’s Annual Report, you will need to include discussion and analysis on your organisation’s expenditure in key reporting categories including program costs, community education, fundraising costs, accountability and administration costs. Where your organisation uses financial ratios to communicate with stakeholders, you should also attach a note, providing information on how the ratio has been determined. For example:

  • Administration Expense ratio (total administration expense/total expenses);
  • Program Expense ratio (total program expenses/total expenses);
  • Fundraising Expense ratio (total fundraising expenses/total expenses);
  • Cost of Fundraising ratio (total fundraising expenses/total fundraising revenue.
  • Charts or graphs that provide information about the composition of the signatory organisations assets or information about revenue or expenses over say a five year period.

Honest communication with donors may require your organisation to explain to donors that in order to run an organisation and use funds effectively, there are unavoidable regulatory and administrative overheads, and important investments in staff and management systems. For example, some organisations may advise donors that a nominated percentage of a donation towards a particular appeal will be deducted to contribute towards administrative expenses for receiving and receipting donations for that appeal. Alternatively, if your organisation intends to distribute all donated funds directly to a project, explain to donors how the costs incurred in administration and fundraising are being covered (such as through other funds, volunteers, retained earnings, a bequest etc.)

ACFID's Financial Definitions can be found in the Definitions section of ‘Use the Code’ on the ACFID website.  

Good Practice Indicators

The following Good Practice Indicators describe a higher standard of practice than that set out in the Compliance Indicators. While Members do not need to meet the Good Practice Indicators to be considered compliant with the Code, they will self-assess against these indicators once every three years. This provides a clear pathway for Members to strengthen and improve practice over time.

  • Member annual report includes:
    • Information on the breadth of stakeholder relationships.
    • Presentation of clear and measurable goals and explanations of how their work and these goals contribute to vision, mission and values.
    • Information on outcomes and impact as well as outputs (including trend information).
    • Disclosure of the source and sustainability of different types of funding.
    • Risk management reporting.
    • A balanced disclosure of positive and negative impacts and performance
    • Environmental sustainability reporting.
  • Annual report and other organisational financial information is accessible in all countries of operation.

GUIDANCE AND RESOURCES 

Good Practice Guidance

Here are some practical suggestions for your organisation to further deepen and improve practice over time. 

Organisational

  • An Annual Report need not be lengthy, nor need it be of elaborate production quality.  The extent of the Annual Report should be appropriate to the signatory organisation’s circumstances. 
  • Signatory organisations should ensure that the Annual Report submitted reflects the legal entity that is a signatory to the Code. 
  • The ACFID logo is available on the ACFID website for signatory organisations to include in their Annual Report as a symbol of quality and accountability to stakeholders.
  •  The Annual report can include references to an international parent body, affiliation, or similar.

Resources