To ARDS A VISION SHARED

I September 2016

Ms Larissa Brown

State ManagerThe Greens Victoria IncorporatedVa The Australian Greens - VictoriaGPO Box4589MELBOURNE VIC 3001

Dear Larissa,

The Greens Victoria Incorporated tla The Australian Greens - VictoriaAuditors Reportto Management- 30 June 20.6

We have completed our statutory audit of The Greens Victoria Incorporated t/a TheAustralian Greens - Victoria in respect of the year ended 30 June 2016. The accompan inreport provides an overview of the results of our audit work and brings to your attentionmatters of significance that arose during the conduct of our audit on the financial statements.

It is important to note that our audit procedures are designed to gather sufficient appropriateaudit evidence to form an opinion on the financial report. Accordingly, our examination inariot have identified allthe control weaknesses that may exist. Furthermore, our audit shouldriot be relied on to disclose defalcations or other similar Irregularities, althou h theirdisclosure, ifthey exist, may wellresult from the audittests we undertake.

Unless specifically agreed, we assume no responsibility to design and conduct auditprocedures to identify matters that may be appropriate to report to you. However, where wehave encountered matters during the course of our auditthat we believe should be brou htto your attention for consideration or further action, we have included them as part of thisreport. You cannot assume that from the matters reported to you that there are no additionalmatters that you should be aware of in meeting your responsibilities as directors,

If you wish to discuss any matters further please do riot hesitate to contact me.

Yours faithfully,Collins & Co

161'^Coll^ns^3, 'Co

CERTIFIED PRACTISING ACCOUNTANTSABN 15 893 818 045

127 Palsley StreetFootscray VIC 3011Australia

Phone (03) 9680 1000Fax (03) 9689 6605

WWWCollinSCO. comau

I

Ryk Eksteen CA RCAAudit Principalre collinsco. coin. au

Liability limited by a scheme approved under Professional Standards Leoislation

The Greens Victoria Incorporated tla The Australian Greens - VictoriaAuditors Reportto Management- 30 June 20.6

Table of Contents

I. Audit overview

1.1 Audit Objective1.2 Committee's Responsibility1.3 Audit Approach and Limitations1.4 Results of the Audit1.5 Audit Opinion

2. Matters requiring consideration

2.1 Confirmation of the GST Registration of New Suppliers2.2 GSTTreatment of Branch Expenses2.3 General Comments on the Effectiveness of the Accounting Function

3.1ndependence

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I. AUDIT OVERVIE

1.1 Audit Objective

Under the terms of our audit engagement we are required to form an opinion as to whetherthe financial report is properly drawn up so as to give a true and fair view of the financialposition at balance date, and of the performance of the entity forthe year, and whether theyare in accordance with applicable Accounting Standards and the Victorian AssociationsIncorporation Reform Act 2072.

For audit purposes the financial statements comprise:o Directorsdeclaration,. Balancesheet,o Incomestatement,. Statement of changes in equity,. Statement of cash flows, and

Notes to the financial statements.

The directors' report is riot covered by our audit report; however we do review the report toensure that there are no inconsistencies with the financial statements.

Our audit is conducted in accordance with Australian Auditing Standards. Our objective is toexpress an independent opinion on the financial report in order to express an opinion on it tothe members.

1.2 Committee's Responsibility

The management committee of the entity is responsible forthe preparation and true and faipresentation of the financial report, including adequate disclosure.

This also includes the maintenance of adequate accounting records and internal controlsthat are designed to prevent and detect fraud and error, and forthe accounting policies andaccounting estimates inherent in the report as well as the safeguarding of assets of theentity.

1.3 Audit Approach and Limitations

Our audit has been conducted in accordance with Australian Auditing Standards in order toprovide reasonable assurance as to whether the financial report is free of materialmisstatement. The nature of an auditis influenced by factors such as the use of professionaljudgment, selective testing, the inherent limitations of internal control, and the availability ofpersuasive rather than conclusive evidence.

Therefore, an audit cannot guarantee that all material misstatements have been detected.

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1.3 Audit Approach and Limitations (continued)

We performed procedures to assess whether in all material respects the financial reportpresents fairly, in accordance with the Victorian Associatibns Incorporation Reform Act 2072,Australian Accounting Standards and other mandatory financial reporting requirements inAustralia, so as to present a view which is consistent with our understanding of the entity'sfinancial position, and of its performance as represented by the results of its operations andcash flows.

We formed our audit opinion on the basis of these procedures, which included:

examining on a test basis, Information to provide evidence supporting the amounts anddisclosures in the financial report, and

assessing the appropriateness of the accounting policies and disclosures used and thereasonableness of significant accounting estimates made by the directors,

While we considered the effectiveness of management's internal controls over financialreporting when determining the nature and extent of our procedures, our audit was notdesigned to provide assurance on internal controls.

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1.4 Results of the Audit

Based upon the audit work performed we were satisfied that there were no matters requiringqualification in our audit report attached to the financial statements of the entity for the yearended 30 June 2016.

1.5 Audit Opinion

Based upon the results of our audit, the following audit opinion was attached to the financialreport of the entity:

Aud^^or^ O inion

In my opinion, the financial report of The Greens Victoria Incorporated trading as TheAustralian Greens - Victoria (the Association) is in accordance with the Associationsmoorporatibns Reform Act (Victoria 2072), Includihg. '

giving a true and fair view of the Association^ financial position as at 30 June 2076 andof its performance forthe yearended, ' and

coinp^ing with Australian Accounting Standards and the Associations IncorporationsReform Act(Victoria 2072).

2.1 Confirmation of the GST Registration of New Suppliers

Issue

We have found that NFP clients often do riot verify the ABN & GST registration of newcontractors and suppliers.

Suppliers may provide "tax invoices" to your organisation while they are not registered forGST, thereby overcharging your organisation for services rendered or goods provided, aswell as defrauding the Commonwealth of Australia.

Implication

A GST input credit Is claimed in error because the tax invoice received from the supplier isinvalid.

The entity will be required to repay any GST input credits claimed in error by amending theBAS forthe relevant quarter or the next quarter, as appropriate.

The entity will also be required to withhold 49% of the suppliers invoice amount where theABN provided to the entity is invalid or riot provided.

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Recommendation

I understand that the State Office relies on the 50+ branch treasurers to confirm GSTeligibility, which make any such confirmation by the State Office an extremely difficult due totime constraints.

Irecommend that the state treasurers be encouraged to check the ABN & GST registrationsfor all new suppliers, especially small suppliers and subcontractors, are checked when theycome on board as a supplier to the entity.

The entity's management should use the ABN lookup function on the Australian BusinessRegister (ABR) website to ensure the information provided by the supplier is accurate andthat the entity is registered for GST forthe period covered by the invoice.

The website linkis: htt :// .abr. business. ov. au/Index. as x

ABN Lookup is the public viewofthe AUStral^^n Business Register(ABR). ftprovides accessto publicly available information supplied by businesses when they register for an AustralianBusiness Number(ABN).

2.2 GST Treatment of Branch Expenses

Issue

We understand from discussions with Ms. Lucy Rucinska-Stanek that the State Office set arule for all branch officer treasures that ifthey do not have a valid tax invoice for all expensesabove $82-50, GST would not be claimable, regardless of the value.

This measure encourages branch treasures to track and collect allinvoices.

This Is also the major reason why the treatment of the same supplier is different acrossquarters (i. e. one quarter there is a valid invoice, the other there is not).

Implication

Where suppliers GST treatment vary, it may lead to GST Input credits not being claimed orclaimed incorrectly.

In most instances the Association will most likely under claim the GST input credits due tothe above conservative approach, which is understandable due to potential public scrutiny.

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Recommendation

We recommend that entity's management ensure that the GST treatment of a specificsupplier remains consistent by performing a review of the GST treatment of all supplies bythat supplier.

2.3 General Comments on the Effectiveness of the Accounting Function

I would like to congratulate Ms. Lucy Rucinska-Stanek and the branch office treasurers onthe high quality of work that they deliver to ensure that key controls and procedures aremaintained and constantly improved.

Ms. Lucy RUGinska-Stanek clearly realise that accurate monthly management informationcan be produced with the minimum amount of effort by having good accounting workingpapers in place.

The implementation of the new branch treasurers' cloud accounting system, BRT, seems tobe a major step in the right direction to deliver timely and accurate information on a quarterlybasis to the State Office.

I was very Impressed with various aspects of the accounting function:

o The monthly reconciliations of all key account balances.

The accurate quarterly reconciliation of the Income and expenses from all branch offices.

The prepayment of expenses to match the expense to the required month in which Ishould have been incurred.

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The monthly payroll reports, superannuation and BAS are presented in a format whichcan easily be understood.

The recordkeeping is very good and supporting documentation is easy to find.

There is always room for improvement and the areas as discussed above require moreattention.

In our experience entities that are audited tend to take a more professional approach to goodgovernance, including consideration of Internal controls, use of external advisory boards etc.

3.1ndependence

We are conscious of the need for Collins & Co to be, and to be seen to be, independent ofThe Greens Victoria Incorporated Ua The Australian Greens - Victoria.

We confirm that for the audit of the financial report of The Greens Victoria Incorporated t/aThe Australian Greens - Victoria forthe year ending 30 June 2016, we have maintained ourindependence in accordance with the requirements and provisions of the Code of Ethics forProfessional Accountants APES 770.

In the spirit of this confirmation, we have prepared the following comments to enable you tohave a clear understanding of the issue.

Otherservices

We have not carried out any engagements for The Greens Victoria Incorporated t/a TheAustralian Greens - Victoria that would Impair our firm's professional independence asauditor.

Any services provided are subject to our own and the profession's strict rules and policiesregarding auditor independence, as well as to certain statutory requirements. We enforcethese rules and policies in order to maintain objectivity and to be free of conflicts of interestwhen discharging our professional responsibilities.

We have provided to the following engagements to the The Greens Victoria Incorporated VaThe Australian Greens - Victoria:

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The audit certification of the South West Coast and Polwarth By Election 30 October2015 By-election ExpenditurePreparation of the entity's special purpose financial report for the year ended 30 June2016 (non-audit).

Some of the safeguards we follow with regard to auditor independence in relation to theprovision of these services include ensuring:

the services have riot involved partners or staff acting in a managerial or decision-making capacity, or being involved in the processing or originating of transactions;

the services have only been provided where we are satisfied that the related function orprocess will riot have a material bearing on our planned audit procedures and would notinvolve us auditing our own work; and

the partners and staff involved in the provision of non-audit services have notparticipated in The Greens Victoria Incorporated t/a The Australian Greens - Victoria'sassociated approval or authorisation processes.

Based on the above safeguards, we are satisfied that the provision of other services has notin any way compromised our independence as external auditor of The Greens VictoriaIncorporated Va The Australian Greens - Victoria.

Unresolved disagreements

We have not had any unresolved disagreements with management about matters thatindividually or in aggregate could be significant to the financial report. Furthermore,management has riot sought to influence our views on matters relevant to our opinion.

Financial relationships

Collins & Co's policies relating to financial interests in or with The Greens VictoriaIncorporated Va The Australian Greens - Victoria are more stringent that the requirementsImposed by regulatory and professional bodies.

We confirm that:

o Collins & Co and its Partners do not have any financial interest in The Greens VictoriaIncorporated Va The Australian Greens - Victoria.

Our current service team members do riot have any financial interest in The GreensVictoria Incorporated Va The Australian Greens - Victoria.

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There are no business interests between The Greens Victoria Incorporated t/a TheAustralian Greens - Victoria and Collins & Co.

The Greens Victoria Incorporated Va The Australian Greens - Victoria has not withheldpayment of external auditfees to Collins & Co at any time.

No portion of fees paid by The Greens Victoria Incorporated Ua The Australian GreensVictoria to Collins & Co is paid on a contingency basis.

Other relationships

We are not aware of any situations where a spouse or close relative of a partner or staffmembers Involved in the audit occupies a position as a director or executive of The GreensVictoria Incorporated Ua The Australian Greens - Victoria that is significant to the audit.

We are not aware of any situations where a partner or staff member has accepted a positionof employment with The Greens Victoria Incorporated t/a The Australian Greens - Victoria ina senior executive or managerial capacity during or since the end of the financial year.

Conclusion

We are satisfied that the policies and procedures we have in place adequately address anyconflicts of interest or potential conflicts of interest. The firm has very strict prohibitions uponthese potential conflicts and has processes in place to detect them and to deal with themshould they arise.

This independence declaration is intended solely for the use of the Committee,management, and others within The Greens Victoria Incorporated Va The Australian Greens- Victoria and should riot be used for any other purpose.