Outputs (Charities)

August-September 2017

Outputs in Audits

We have become aware that Charities Services has been giving contradictory messages in different webinars when it comes to output/outcome auditing.

The new reporting rules for registered Charities require them to report on outputs and outcomes as part of the same report that contains their financial statements (‘performance report’), and these are part of an accounting standard. An auditor generally has to check for compliance with relevant accounting standards, and the question is whether the output/outcome reporting must be a part of this audit as a result.

In one webinar Charities Services said that as long as the audit is not a statutory audit (i.e. required by law because, for example, your annual expenditure is over $500,000) an organisation can opt to have outputs/outcomes audited or not. In another they said that if there is an audit, then outputs and outcomes must be part of it and there is no choice.

The first information was the correct one. Unless an audit is required by law, an organisation can choose what to engage an auditor for. This is called a ‘limited scope audit’, and an organisation can specify that they want the outputs/outcomes (or, in fact, any other part of the report) excluded from the audit. The subject of an audit is a matter of agreement between the organisation and the auditor.

Auditing outputs can take a significant amount of time, so this is an important consideration. If you just specify to ‘have an audit’ with us (or another accountant) it will be assumed that you want the whole lot audited. At CCA, if you have a lot of outputs we generally get back to you and ask if you would prefer to have these excluded from the audit. If there are only a few and reasonably easy to verify outputs, we will usually just include them.

Very often we are asking organisations to change certain outputs we are auditing, mostly because they contain a number that cannot be verified. Common examples are attendance at events, or ‘reach’ of newsletters. If you claim that 1,000 people attended your public event, there would have to be some evidence – this may be as simple as a photo showing the crowd from which a reasonable estimate can be made. With newsletters, we can often verify how many you’ve printed, or emailed out, but ‘reach’ implies they are actually being read and/or passed on. For this you would have to have some survey evidence or similar. If there is no reasonable evidence we would ask you to report on the event qualitatively, and report on newsletters by print run or mailing list.

CCA is being engaged in a number of ‘limited scope’ audits each year, not just around outputs but also because some organisations only want a certain part of their operation looked at, such as a conference or meeting they held in that year. Such audits are common enough.