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

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 included in the Annual Report and not the auditor’s report included in the audited full 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.

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.

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.

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