Preparation and disclosure of financial statements are key components of transparency. They deter improper diversion of funds and other misdeeds, provide a defense to critics and serve as a witness to both believers and nonbelievers.
- Compliance with Accounting Standards: Financial reports will be prepared at least annually and shall conform to International Financial Reporting Standards (IFRS). Where a country has not adopted full IFRS or IFRS for SMEs, reports may be prepared using the standards prescribed by the accountants’ professional body of the member’s country or, where applicable, the relevant economic regional bloc in which the member operates/resides.
- Financial reports must accurately portray the full range of the member’s operations regionally and internationally.
- Financial reports definition: A complete set of financial reports includes:-
(a) a statement of financial position as of the end of the reporting period (previously referred to as a balance sheet);
(b) a statement of activities for the reporting period (previously referred to as a statement of revenues and expenses/income statement) and classification of expenses by categories in the statement of activities for the reporting period or accompanying notes;
(c) a statement of cash flows for the reporting period;
(d) accompanying notes to the financial statements;
(e) a statement of movement of shareholder funds or grants/donated funds as the case may be.
- Project reporting: On written request, every accredited member must provide the donor with a report on any specific project/activity for which it sought or is seeking gifts. The primary responsibility for project reporting is to the specific project’s donors.
- Grants: Significant grant making activities should be properly disclosed in an organization’s financial statements, including a description of the nature and purpose of the grants and the grant administration policies.
- Vetting of prospective recipients: Every member shall have a mechanism to ensure vetting of prospective recipients of funds to ensure funds shall be used for the purpose intended and that the prospective recipients carry out their operations in a moral, ethical and legal manner.
6.4 Financial Oversight
The Board shall approve the engagement of an independent certified public/chartered accountant (CPA) to perform the annual audit or compilation of the financial statements. Every member whose revenue exceeds US$50,000 or equivalent shall produce audited accounts. The CPA appointed by the Board shall be duly licensed to issue audit opinions and/or accountant’s reports or the equivalent by the respective professional body in their country/regional bloc. The Board shall verify that the accountant is in good standing with the respective professional body.
Where the size of the organization justifies, the member shall appoint an internal auditor who shall report to the Audit committee of the Board.
The Board shall:-
(a) review the member’s financial statements on a periodic basis;
(b) receive reports and recommendations from the Audit Committee in relation to the financial statements and related reports and ensure that the member develops appropriate responses to the deficiencies, weaknesses or risks so identified;
(c) maintain appropriate communication with the CPA regarding the planning of the annual audit, review or compilation of the financial statements, the management letter or other related matters.
6.5 Audits and Reviews
6.5.1. Annual Audit:
The annual audit is evidence of financial accountability to an organization’s donors and investors. The auditor’s report provides reasonable assurance that the financial statements are free of material misstatements and are reliable for supporting wise and perceptive policy decisions.
6.5.2 Annual Compilation:
The annual compilation is the gathering of financial information and the development of financial statements for an organization. A compilation involves no assurance on the financial statements, as the accountant merely prepares the financial statements for the member from the underlying documentation. The CPA’s participation may help users feel that the statements are prepared with knowledge of applicable standards. An annual compilation may serve as an alternative accountability tool for members who are not under any statutory obligation to subject their financials to an audit.
6.6 Compliance to Biblical values in Investing and Grant making
A member shall not invest or provide financial support to organizations or projects which promote non-Biblical values including but not limited to homosexuality, pornography, abortion, euthanasia and gambling and speculative investments, or organization whose products and activities have a negative environmental and social impact.
6.7 Compliance with applicable laws and regulations
Every member shall put in place the internal controls necessary to ensure compliance with , applicable laws and regulations with regard to all aspects of the organization’s activities.