In a recent survey of 70 Not for Profit (NFP) leaders, 86% were confident that all appropriate laws were being complied with. Such high levels of confidence are being expressed even with the continued reporting of wage underpayments, even in the for-purpose sector.

Instances of such wage underpayments include, but are not limited to:

• Red Cross underpaying its employees an estimated $25M
• St Peter’s Lutheran College in Brisbane required to pay $2M in backpay
• Paraplegic and Quadriplegic Association of NSW underpaying $705,000 in wages
• Work Vision underpaying its employees by $8.9M.

In addition to continued wage underpayment cases, I have been working with for-purpose organisations that have not remained abreast of key changes in The Australian Charities and Not-for-profits Commission (ACNC) compliance and reporting requirements.

These changes included the removal of the transition provisions, which allowed accountants to complete reviews and audits for medium and large charities. The removal of these provisions over two years ago now requires the review or audits to be completed by an ASIC registered auditor.

With such non-compliance continuing in the for-purpose sector, is the high level of confidence reported in the survey based upon overconfidence, or a misguided trust in those providing the leaders with assurance of compliance?

As a registered auditor and a community member who resides on Boards and Committees, I have the fortunate position of understanding the levels of assurance being provided.

Audit Compliance Considerations

Under Australian auditing standards, an auditor is required to consider an entity’s compliance with laws and regulations when completing their procedures. However, this compliance is only required as it pertains to the presentation of the financials and the ability of the organisation to continue trading.

Hence non-compliance which results in fines, penalties, third-party investigation, or non-compliance deemed low risk by the auditor, may not be considered, identified or reported.

Key Audit Compliance Areas

Being an audit partner at Lambourne Partners, and being involved in setting our audit approach, I have utilised my experience as a Board and Committee member to tailor our audits to provide a greater level of assurance on compliance matters we believe are important to our clients. These areas include, but are not limited to:

• GST receipts and credits are being accurately recorded, and claimed/paid to the ATO in a timely manner
• Superannuation guarantee contributions for employees are in accordance with legislation and/or employment contracts, and are paid within statutory timeframes during the year
• Calculation and inclusions of defined wages as part of payroll tax calculations
• Collection and retention of employee file records and other key information as outlined by the Fair Work Commission and the National Employment Standards.

With the Fair Work Commission putting employers on notice that the burden of proof in future employment disputes is on employers, and the quality of their documentation, coupled with the ACNC and ASIC looking to increase their levels of compliance reviews, is the confidence in the sector being driven by known level of assurance, or a perceived level of assurance?

How We Can Help

If you feel that the level of compliance assurance you are receiving is insufficient, or you are not aware of your level of compliance, please feel free to contact Paul Quealey below or call (02) 4969 6600.