Trust accounts get a tardy mark
six The Hutt Mana Charitable Trust’s persistent late filing of financial returns risks it being struck off by the Charities Commission, losing its tax exemption status.
The trust looks after about $35 million of assets – the last remnants of the carve-up of power boards in the 1990s – on behalf of Porirua, Hutt Valley and north Wellington people. Its own deed requires a set of financial accounts to be audited and an annual meeting held within five months of the end of its financial year – June 30.
Charities Commission rules allow months to file returns.
Trust chairman Ian Hutchings said the 2010-2011 accounts were finally signed off two weeks ago – nine months after the nominal balance date.
Kapi-mana News put it to him that since the inception of HMCT and its forerunner the Hutt Mana Energy Trust, the accounts and annual meeting have always been late.
‘‘I’m not sure that’s right,’’ he said. ‘‘For most of the years I’ve been involved they have been late at times – in my view far too late sometimes. I continue to become frustrated when we outline our expectation we want to have the accounts done within three months and hold our AGM, and they [accountants and auditors] all smile nicely and say they’ll do their best.’’
He said the problem this year was the liquidation last September of the Hmct-owned insulation installation company Energysmart.
In November the estimated loss to HMCT was put as high as $2.5 million so there is particular interest in the 2010/11 accounts.
Mr Hutchings said there has been a great deal of discussion ‘‘back and forward’’ between the accountants and auditors on how to account for the Energysmart ‘‘impairment’’. The liquidator had also been involved.
His view was the delay had not hindered trustees’ ability to have a clear view of the trust’s financial position, on which to base decisions such as the distribution this month of $301,000 in community grants.
‘‘We’ve had to put some numbers of paper and they’ve been there since November. The debate has been about finding adequate documentation the auditors are satisfied supports that.’’
Charities Commission chief executive Trevor Garrett said charitable organisations registered with it that have not filed returns six months after the end of their financial year are sent a reminder letter. They get a more ‘‘strongly worded’’ reminder a month or two later and at around three months overdue – which is where HMCT is at – ‘‘We get to the stage where we look at de-registering. That’s how seriously we take it.’’
There may be problems with a charity’s change of secretary, information not being passed on, etc., but such organisations have obligations to the public and the media, who are entitled to view that financial information, he said.
Of the more that 25,000 registered charities, Mr Garrett guessed around 1000 would be deregistered each year for failing to meet returns deadlines. They can reapply, but the Commission notifies Inland Revenue, and tax obligations kick in for the period until they are re-registered.
A stand down period of some years for reregistration can be applied to a charity where there is proof of gross negligence, money going missing, etc. There is potential for a similar stand down for ‘‘persistent non-compliance’’, Mr Garrett said.
‘‘We haven’t got to that stage yet but we might have to review that.’’
Bay drive: Facilitator and writer David Parmenter and Porirua Library assistant Joel Alcorn with two of Mr Parmenter’s titles held on local shelves.