INTERNAL AUDITORS POSE NFP GOVERNANCE QUESTIONS

 

The Institute of Internal Auditors – Australia has released a new guide for directors of NFPs, drafting 20 critical questions they should be asking.

 

IIA-Australia CEO Peter Jones said the questions were a quick and easy reference for an estimated 257,000 Australian NFPs.

 

The Australian Charities and Not-for-profits Commission reported that charities' annual revenue in the 2016 financial year was more than $142 billion, said Mr Jones.  They remained among Australia's most significant employers.

 

'Good governance structures are [as] important in the charity and NFP sectors as it is in the financial-services sector,' he added.

 

Mr Jones said that following investigations in 2017–18, the ACNC revoked the charity registrations of 22 organisations, the highest ever.

 

Charities had corrected more than $20 billion in revenue and $354 million of assets to improve the accuracy of the charity register.

 

The 20 critical questions include:

  • Is the NFP organisation's governance framework contained in a formal document that adopts a holistic multidimensional approach to capture all structures and processes across the organisation: code of conduct and conflict-of-interest policy covering members, paid employees, non-paid volunteers and suppliers; strategic management, based upon risk and with strategically-based budget-setting; cash-reserves policy; risk management, insurance, fraud risks;  resource management; information management; compliance and reporting; and audit and review?
  • Have NFP organisational and fraud risks been identified?  Are there appropriate risk-management actions in place, monitored and regularly reported to the board?
  • Have governance activities, responsibilities and delegations been clearly defined, specifically for NFPs, and detailed in a fit-for-purpose governance document that is regularly reviewed and updated?
  • How does the board gain assurance that all government and regulatory requirements have been identified and assigned, and that the NFP conforms with these requirements?

And a killer question: How does the NFP board know that its governance and assurance is operating effectively to ensure the organisation's long-term sustainability?

 

They're available at www.iia.org.au/technical-resources/20-critical-questions-series.