State gov says charity collapse isn’t their fault
THE State Government says it had limited ability to monitor how failed charity FSG spent taxpayer funds.
Minister for the Department of Communities, Disability Services and Seniors, Coralee O'Rourke, confirmed her department provided approximately half of FSG's $60 million annual budget.
But she said decisions on how that money was spent were the responsibility of the FSG board.
"Unfortunately they're an independent, non-government organisation, they have an independent board that is responsible for making all the business decisions," she said.
"Some of the business decisions they have made have not worked out to be viable or sustainable, but that's something that sits with the board. That's their responsibility.
"Governments have a limitation with regards to how they can step in.
"The board has to have appointed to it appropriate people with the appropriate qualifications to make good quality business decisions.
"I agree with you that they haven't made the right decisions, these are questions you should be posing to the board and CEO.
"I don't know the processes they went through to make their decisions because that's their responsibility."
Ms O'Rourke likened the board of FSG to the owners of a "fish and chip shop".
"It's the same as a fish and chip shop down the road run by Mr and Mrs so and so," she said.
"They receive revenue from the sale of their wares.
"They have to make efficient decisions about how they improve their profit, they don't want to go into loss - that's a very small scale example obviously.
"I'm just trying do give you examples - a non-government organisation has a board, we can't step into their decisions.
"There are limitations with what we can and can't do.
"They have to answer. They have to answer to their clients, they have to answer to their stakeholders and they provide their financials to us at the end of each year."
FSG are required to generate annual reports that are made public on the Australian Charities and Not-for-profits Commission website.
Ms O'Rourke said FSG also provided an independent report to her department each year.
Despite reporting losses of $1 million in 2015, $2.29 million in 2016 and $5.225 million in 2017, Ms O'Rourke said the independent auditor, who she named as KPMG, did not raise any issue with the charity's finances.
Based on the information Ms O'Rourke claims she received from KPMG, she was unaware FSG was recording losses.
"Of course it rings alarm bells (the losses), but what I'm saying is the information provided by the organisation's independent auditor didn't raise any flags with the department around their ongoing viability," she said.
"If I can go back to 2015/16 and 2016/17 years, the external auditor didn't highlight that there was any challenge to the going concern for FSG.
"The moment it became apparent in early May (2018) that there was an ongoing concern with regards to their financial viability was when the department stepped in and that was when the request for independent financial investigations by BDO (auditors) were commenced."
The department of communities has previously said BDO concluded FSG's financial position was due to "an over delivery of services and unfunded community projects"
Ms O'Rourke said she has personally contacted ASIC with regards to how the FSG board conducted business.
"In relation to management of boards I have also written to the Australian Securities and Investment Commission (ASIC)," she said.
"They are also a body that oversees the implementation of decisions and operation of businesses, companies and so forth.
"They have been advised of the current situation with FSG and asking them to have a look into it."