Assurance Engagement - Oxfam Analysis - Case Study Example

ASSURANCE ENGAGEMENT-OXFAM ANALYSIS Prepared by (Student’s Name) Professor’s Name Institutional Affiliation Course Name Date A. Introduction/ Background Information The focus of this paper is on analysing Oxfam International in relation to whether it is a viable charity organisation to receive potential donations. In fact, this paper provides an audit overview of the organisation in regards to whether it is operated in fraud-free environment. Oxfam International is a charitable organisation founded in 1942 and has its headquarters in Oxford; United Kingdom. It is made up of 17 organisations that conduct operations in more than 94 countries across the globe (Oxfam International, 2015). The charity organisation is focused on issues related to poverty, disaster, advocacy as well as policy research. The charity confederation is entirely focused on finding practical and innovative ways for which people across the globe can lift themselves out of poverty and thus, live a successful life. It has more than 10,000 staff members and more than 50,000 people providing services as volunteers and others set out under internship programs (Oxfam International, 2015). It is registered as a notable Foundation within The Hague, Netherlands. Oxfam recently released strategic plan seeks to achieve important goals in the period between 2013 and 2019. In essence, it seeks to seek active citizenship especially for women, young people and the poor and marginalised communities; advance on aspects related gender justice; encourage in intensive campaigns directed towards saving people’s lives into the future; ensure sustainable food practices are put in place; and also, make sure to avail finances for development and universal essential services amongst others (Oxfam International, 2015). Of particular interest to note, Oxfam makes efforts to ensure that people are fairly-positioned to exercise their respective human rights and, also sustain their own lives. B. Financial Analysis It is important to note that Oxfam International receives most of its incoming resources from different affiliates that are positioned across the world. These affiliates subscribe to the objectives and goals of Stitching Oxfam International and have all been entered into the Register of Affiliates in regards to the Stitching Oxfam International’s Constitution. As a result of this well-laid out structure of funding; Oxfam International is not exposed to the aspect related to competition of subscribers affiliates are tasked with this responsibility. Current Ratio Analysis: Current ratio=current assets/current liabilities 2014: 5,130,805/814,751 = 6.29 2015: 5,173,231/976,896 = 5.29 The organisation’s current ratio decreases slightly within the two-year period from 6.29 to 5.29 in 2014 and 2015 respectively. Despite the fall in this ratio; it still means that the Organisation is positioned fairly to meet its short-term obligations as and whenever they fall due. Oxfam’s income level has increased within the two-year period from an unrestricted total of GB£11,314,936 to GB£ 11,789,801 in the period between 2014 and 2015 respectively. The £0.5M increase in the level of these revenues is attributed to additional projects income as well as Oxfam 2020 contributions that were received from its numerous affiliates from across the globe. In fact, part of this amount was offset by a single donation from the Atlantic Philanthropies. In consequence, the different affiliates continued to offer their respective contributions of 1% of their relative income to the core activities of the Secretariat; 0.3% to the Membership Growth Grant Fund; and a further 0.2% on Income Growth Fund (Oxfam International, 2015). On the contrast, however; the organisation seems to be experiencing an increase in its overall liabilities position. In fact, the amounts owed to creditors within a year period has increased significantly from GB£814,751 to GB£976,896 while there has been a provision of liabilities and charges for dilapidation of offices incurred of GB£ 40,000 within the current year of operation (Oxfam International, 2015). It is important to understand that the overall increase in the level of liabilities within the current year is attributed to a direct increase in the level of taxation and social security and accruals for amounts that are still being owed to the different affiliates. C. Corporate Social Responsibility Corporate social responsibility is imminent engagement of voluntary activities undertaken by organisations in order to operate in economic; social and environmental sustainable manner (Oxfam International, 2015). Being a charitable organisation it is a challenge to distinguish between these voluntary activities and the core business model. In fact, the two are integrated to form a sole purpose and vision of the organisation at hand. Some of the notable engagements of this organisation are discussed as below; Oxfam International has continued to offer humanitarian responses in Lebanon. Prior to the current refugee crisis as a result of instability in Syria; Oxfam used to foster dialogues between citizens and local authorities in order to ascertain of socio-economic development (Oxfam International, 2015). As a result of fostering this dialogue, there had been increased respect for the needs of the existing communities. In essence, they also provided a platform for which to provide humanitarian aid as well as sustainable poverty reduction for the future. In the period between 2014 and 2015; Oxfam International changed focus and embarked on providing humanitarian services to the Syrian refugees in Lebanon. For instance, using the cooperation of local authorities in Bcharre, Zgharta and Ghazzeh; the organisation managed to offer assistance to nearly 18,000 Syrian refugees 150% of them being women and children (Oxfam International, 2015). In the southern suburbs of Beirut, the underlying existing local authorities to provide to conduct a non-discriminatory access to healthcare for 15,000 vulnerable Lebanese and Syrians at a very minimal amount of $5. Consequently, the organisation has further ensured to provide Tajikistan people with clean water. Oxfam fostered access to clean water through the Tajikistan Water Supply and Sanitation Project, which operates in five districts of Kulyab; Fakhor; Murminabad; Vose and Rudaki. Through this project, Oxfam expects to cover more than 85,000 by the end of 2017 in order to help with the improvement of people’s quality of life (Oxfam International, 2015). Together with the Union; the organisation has also provided voluntary dialogue platforms between citizens and the Tajikistan’s government for the purpose of ensuring that all opinions of citizens are taken into account. In truth, it is as a result of this voluntary commitment that the World Bank has also seen the importance of also assisting with the situation at hand through Social Accountability Fund that is intended to promote involvement of citizens in relation to development initiatives. Notably, Oxfam International also promotes aspect related to provision of sustainable food amongst people. The organisation has assisted numerous communities in order to raise their respective complaints to the International Finance Corporation (IFC) (Oxfam International, 2015). This has especially been executed in IFC through its platform Compliance Advisor Ombudsman to back-up investments in Honduras; Guatemala and Vietnam amongst others. D. Going Concern Assessment An organisation is deemed to be a going concern when it is easily established that it is capable of paying-off its underlying debt commitments as and whenever they fall due and be still able to continue with its overall operations without any level of intention or necessity to liquidate or even wind up its activities for at least in 12 coming months. The fact that Oxfam has been able to prepare and disclose its financial activities within the annual report is in itself a basic indication that it is capable of conducting operations into the future. Notably, Stitching Oxfam International trustees’ report for the year that ended in March 31, 2015 provides detailed information on both the current and probable future operations of the company thus, postulating that currently enjoys a going concern framework. In regards to accountability, the report notes that there is a cross-affiliate Accountability Working Group (AWG) that generated an Accountability Framework in conjunction with Oxfam Open Information Policy and Stakeholder Engagement Policy that have all been endorsed by the Executive Board. Given that the organisation was able to come up with Oxfam 2015-2017 Operation for Accountability is a clear and concise indication that is a going concern. Certainly, the trustees report ascertains that through the financial review that the underlying health of the entire Secretariat is indeed satisfactory. The level of overall incoming resources for the operation year that ended in 2015 indicated a significant increase of about £0.5M. The significant increase is portrayed as being a result of future additional project income as well as resources associated with Oxfam 2020 contributions accessed from the different affiliates across the globe. Each of these affiliates further contribute to the going concern aspect since they have continued to commit to paying at least 1% of their respective income to the fundamental activities of the Secretariat as a whole; 0.3% to Membership Growth Grant Fund and another 0.2% of their total income to the underlying Income Growth Fund (Oxfam International, 2015). The report postulates that the Secretariat has continued to execute operational activities on fair manner as it has ensured to meet the expectations of the Oxfam Financial Standards over the years. As a result of this commitment; it is established that the financial position of Stitching will indeed remain satisfactory in the coming operational years and this can be proven by the current financial projections for the future operations. The fact that the charity is set to assist and foster possible alterations in matters related to governance and operations; will facilitate the implementation of the Oxfam 2020 strategies and policies posit of a probable going concern capability. Oxfam has a wide variety of income funds, which will certainly ensure its future survival. For instance, the Special Project Fund and the Board Designated Reserve ensures to buffer Oxfam Secretariat against possible financial effects of potential risks; this is in accordance with the Secretariat’s Reserves Policy. Although there has been minimal efforts made to review the policy on a regular interval since 2008; the Executive Board seeks to assess the Reserves Policy in the coming financial period. To make sure that Oxfam’s operations flow into the future, the Secretariat has made sure to formulate and sustain a strong degree on risk management commitments for purposes of identifying and assessing, monitoring as well as reporting possible risks that might curtail future operations. Identified risks are further set out clearly within the Secretariat Risk Register and solutions provided to suppress them from affecting aspects related to governance and reputation. Other crucial indicators of the company’s going concern capability lies in its ability to re-appoint PwC as its future independent auditing firm and, also its capacity to sustain a legal status through its registration in The Hague, Netherlands. E. Scope Oxfam operational environment is vehemently controlled and guided by the recently released strategic plan - The Power of People against Poverty- that covers the period between 2013 and 2019. The strategic plan is also adopted by its affiliates across the globe. It is committed to accomplishing six “External Change Goals” as well as “Enabling Change Goals”. The six External Change Goals set out to change the world are provided as follows; Goal 1- Active Citizens; seeks to ensure that, by the year 2019, more women, young adults as well as other poor and marginalised persons will have an opportunity to enjoy their respective civil and political rights in order to possibly influence decision-making processess by way of interacting with different government agencies while still holding them accountable for their actions (Oxfam International, 2015). Goal 2- Advancing Gender Justice; seeks to ensure that, by 2019, a substantial number of poor and marginalised women will have a claim to their rights through processess related to engagement and leadership processess; and thereby ascertain that elements of violence against women remains significantly lower. Goal 3-Saving Lies, Now and in the Future; sets out to reduce the impact of natural disasters from killing persons as a result of illness, insecurity and deprivation. Goal 4- Sustainable Food; is an objective that the focuses on ensuring that rural persons will enjoy a future food security, prosperity and resilience through access to sustainable food systems. Goal 5- Fair Sharing of Natural Resources; is a goal set out to ensure that marginalised people will be more successful and resilient despite the fact that there continues to be a rise in competition for land, water and food (Oxfam International, 2015). Goal6- Financing for Development and Universal Essential Services; is a goal that seeks to ensure that there will be a high degree of quality and quantity of financial flows that should target poverty and inequality while still make sure to empower people particularly women by holding governments, donors and private sector to account of the revenues is spent. It is important to note that Oxfam International operates under the vision of ensuring a world without any form of poverty. The purpose of this charity organisation is set out to empower citizens to develop a future that is deemed to be secure, and free from elements of injustice of poverty. To ensure that this purpose is achieved, Oxfam adopts a combination of rights-based as well as sustainable development programs; public education and, also humanitarian help in aspects related to disasters and conflicts resolution. The controls set in place to constantly check on incoming resources are deemed stronger and is updated on a regular basis. A perfect way for which these resource funds are controlled can be portrayed by the charity sustaining Secretariat’s Reserves Policy that ensures to uphold effective spending mechanisms. Consequently, the Board of Supervisors are another model for control checks and especially in regards to how project income is spent. The Board is mandated with the responsibility of ensuring the effectiveness of the overall strategic plan while the Finance and Audit Committee sets out to oversee the Secretariats fiscal responsibilities that include; review of financial statements, monitoring of possible financial-related risks and compliance. In essence, it makes sure to oversee the underlying financial health of confederation; affiliate boards that adhere to financial health of their affiliates. This committee also facilitates the Board of Supervisors in executing their duty of ensuring compliance to internal risk management, accountability mechanisms and, also fundamental policies that largely relates to policies tackling on how to consume underlying reserves. F. Testing & Sampling There have been continued news reports all over the different forms of media platforms and, also social media that postulate such huge non-profit organisations like Oxfam and Christian Aid among others spend at least more than half of their donations on self-interest activities (Craig, 2014). On a number of occasions, it has been ascertained that these big charities have continued to mingle internal operations with external influences and especially politics, which is deemed not auger well with different potential donors. However, on the positive note, the charity has been seen to have taken stringent strides to come up with yearly financials for a substantial period now. These financials that include the statement of financial activities, balance sheet and the cash flow statement have all been expounded fairly for all potential users. In fact, these statements have all been further expounded using a series of accompanying notes. For instance, under the basis of accounting policy; it is noted that the financial statements have all been prepared under the historical cost convention. They are also prepared on a going concern basis. The fund accounting policy indicates that the unrestricted funds are available for utilisation of the Board’s discretion in relation to the goals of the Stitching Oxfam International. In comparison to other UK-based charities like Lloyd’s Register Foundation, The Racing Foundation, Sue Ryder and Age UK, Oxfam is considered more organised and fairly-positioned given the wide array of incoming funds from its different affiliates across the globe (Meredith, 2014). Unfortunately, the Oxfam does not provide remuneration details for its board of trustees; which is an indication that there is no clear policy on how this processess is executed. This might be red flag for the organisation in relation to how they spend their incoming funds. It might be explained by the fact that the organisation focuses on paying for each duty separately. For instance, expenses related to advocacy and planning; global programs and humanitarian coordination; global communications and planning and program development have all been allocated different amounts. G. Management Team The organisation’s day-to-days operations are executed by the Stitching Oxfam International Trustees who are further divided into two governance platforms including; the Board of Supervisors that has three committees; finance and audit; governance and Board-Ed committees. And the Executive Board that is composed of such committees as; operation, public engagement; confederation development; long term development and knowledge and influencing committees. It is important to note that the affiliates within the different countries also have affiliate trustees that oversee operations within those areas. These affiliates are the core funding unit for the entire Oxfam International operations and thus, their activities in regards to management function is deemed to be useful in ensuring future operations and survival of the organisation in meeting its overall objectives. H. Audit Opinion The organisation’s external auditor is Pricewaterhouse Coopers. This auditor report indicates that Stitching Oxfam International financial statements present a true and fair view of the state of the organisation as at the end of 2015 financial period. It also ascertains that these statements have been prepared and presented in accordance with the UK Generally Accepted Accounting Principles. Notably, the audit was conducted in regards to ISAs, which covers organisations operating in both United Kingdom and Ireland. My opinion is also that the statements reflect a true and fair position of the organisation as at the end of the operational period. This is clearly supported by the intensive efforts made by the charity to provide detailed accompanying notes to the different accounting policies adopted within the period while still ensuring to give a true picture of the same. Thus, Oxfam can be said to be conducting operations in a manner that seeks to meets its overall purpose of reducing poverty levels in different affected countries across the world by advocating for dialogue platforms between citizens and different government agencies. Conclusion & Recommendation From the analysis above, it can be noted that Oxfam International liquidity and leverage position still remains to be strong. Consequently, the entity is currently enjoying an increase in the incoming resources amounts, which is highly attributed to the trust and honesty of its operations. The firm does not suffer from possible collapse in the future since it access its resources from a multiple number of affiliates from across the globe. There has been no form of fraud reported by the company and many people across perceive the entity as being honest in its operations; this is despite some negative views about the UK charity industry as a whole. As a result of this positive indications; Joe Blogs should go ahead and make his donations to Oxfam given that the Secretariat is effective and efficient in the manner for which they handle incoming resources from numerous donation agencies and individuals. References List Craig, D. 2014. “The Great British Rake-Off... What Really Happens To The Billions YOU Donate To Charity: Fat Cat Pay, Appalling Waste And Hidden Agendas” Daily Mail UK. Retrieved on April 24, 2016 from http://www.dailymail.co.uk/news/article-2835947/The-Great-British-rake-really-happens-billions-donate-charity-Fat-cat-pay-appalling-waste-hidden-agendas.html Meredith, C. 2014. “Oxfam Controversy: Suspicious Tory Minds and the Influential Ex-Politicos behind Britain's Biggest Charities”. The Huffing Post. Retrieved on April 24, 2016 from http://www.huffingtonpost.co.uk/2014/06/13/oxfam-charity-tory-complain_n_5491682.html Oxfam International. 2015. 2014-15 Annual Report. Retrieved from https://www.oxfam.org/sites/www.oxfam.org/files/file_attachments/story/oxfam_annual_report_2014_-_2015_final.pdf Read More