One of the most disturbing things about the current ACS imbroglio is the many questions that are emerging about the organisation’s finances. The current Management Committee can be accused of many wrongdoings, but one thing it has been spectacularly successful at is increasing the ACS’s revenues over the past few years.
There is no great secret where the money has come from. Even a rudimentary examination of the extremely vague financial records shows that the great majority of revenue has come from professional fees, and in particular the Overseas Skills Program. The number of professional members as declined sharply, so have membership fees. They have sold their soul to the devil.
The big question, unanswered by the Management Committee and impossible to derive from the published financial statements, is where the money is being spent. Many questions have been asked about how much has been spent on various promotional activities, and what metrics have been used to measure the effectiveness of this expenditure, but of course no answers have been forthcoming.
There is no evidence of fraud, but the culture of secrecy and the extreme lack of detail in the financial reporting have led to many suspicions that there are financial dealings that senior management would prefer not to be discovered nor discussed.
One important area of serious concern is the amount being paid to senior executives in the organisation. Public companies are required to disclose this information as a matter of course, and you would think that in a supposedly member based organisation like the ACS the figures would be public.
Not so. It seems they are being paid vastly more than executives in similar organisations. They could easily disprove this of course, by publishing the numbers.
I recently received some interesting analysis from an ACS member in Canberra, Steve Jenkin He has done some digging around and done an analysis of the very rudimentary data published by ACS. I publish his analysis below, with his permission.
Attached is a detailed spreadsheet Steve has created of all ACS financials going back 15 years. He has pieced this together from various published information and from the ACT Government’s file of annual reports. You won’t get this anywhere else, and certainly not from the ACS, which has often changed the format of the data, sometimes even including it only as an image so it needs to be rekeyed. Stevel has gone to a lot of trouble.
Note the increase in ‘key management compensation’, more than trebling from 2017 to 2018, and increasing by another 20% from 2018 to 2019. It’s a lot of money and the increases are totally unexplained.
We don’t know who these key managers are (though they obviously include CEO Andrew Johnson), nor how many of them there are, nor whether the increases are because there are now more people in the management pool. See the second tab of the spreadsheet. Just how much is Johnson earning?
There are many other questions. The justification of the millions being spent on flashy premises at Barangaroo and Docklands (occupancy expenditure more than trebled with the move). In 2018 it also bought River City Labs in Brisbane for an undisclosed sum, which added extensive premises in Fortitude Valley.
Another concern is the amounts spent on overseas travel (travel expenses doubled from 2017 to 2019). The justification for joining the World Economic Congress (not in the accounts but believed to be in the order of $150,000 – the ACS refuses to disclose). The exorbitant amounts being spent on legal fees, which will appear in this year’s numbers, with around $750,000 spent on the December court case alone, including costs awarded to the other party, Roger Clarke.
There are increasing suspicions (and I can assure you I am not alone) that one of the key reasons for the lack of disclosure is that the current Management Committee has something to hide, or at best wants to avoid embarrassing details from emerging.
I have seen other analysis which comes to the same conclusions. This really needs examination.
Note that one of Ian Oppermann’s motions to be put to the ACS Congress on Friday calls for a thorough audit of ACS accounts. This is certainly long overdue.
Steve Jenkin’s analysis
Words and numbers unedited by me.
Employee benefits and management ‘compensation’
The single largest expense in 2019 of the Association was “Employee benefits expense”, nearly 50% of all expenses, with "Key management personnel compensation” at disquieting and unexplained levels.
I found no mention of staffing levels or what activities / groups they provided / worked in. There is no explanation of growth or breakdown of the majority revenue figure, "Professional standards income”.
As the major income of the Association, whatever this income stream is from, is both a major risk if curtailed by external events and, if unconnected with the Objects, renders the Association a “For Profit” enterprise.
"Employee benefits expense” and "Key management personnel compensation”
- Total Revenue $45,186,753
- Professional standards income $38,550,988
- Employee benefits $21,569,084
- Key management compensation $2,252,409
- Total Revenue $36,631,061
- Professional standards income $31,540,771
- Employee benefits $19,671,258
- Key management compensation $1,888,398
- Total Revenue $33, 542,788
- Professional standards income $28,.141,567
- Employee benefits $16,291,524
- Key management compensation $519,468
The 2019 Annual Report fails many Governance, Financial Reporting and Membership Transparency tests. The associated Financial Reports are also incomplete and uninformative.
pg 11 of the Financial Report, "Other assets” jumped from $1.7 million to $23 million without explanation, with a similar drop in "Cash and cash equivalents”
pg 13 of Fin Rpt: Investing activities lists without explanation $18 million transferred to "Receipts/(Payments) for long term investment funds”.
pg 10 of Annual Report: Membership numbers are claimed to be 44,784 and to have grown by 7% in 2019 and for 4th consecutive year. Which is at odds with the amounts reported as “Membership Fees” in the Financial Report:
2019 $2,879,323 [pg 24, 2019 Fin Rpt]
2015 $3,273,513 [pg 20, 2015 Fin Rpt]
Annual Membership fees have only increased from $350 to $400.
pg 6 of 2015 Annual Report provides a detailed membership list, by type, and 21,134 total members, with a second table of “first time new members”. There is no valid reason to drop these tables from subsequent reports.
In both 2015 and 2019 Financial Reports, there is no mention of “Capitation” fees paid to Branches. Nor was there any reporting I saw of members by type by branch.