Making meaningful differences in farmers' lives around the world
Show me the money (or auditing)
We have the following proposal for managing "auditing" of organisations who use the 5% logo in their sales:
- Any organisation that joins must nominate their usual accounting firm as their assessor
- The accounting firm should be emailed a copy of the 5p4f guidelines so that they know what they have to do
- Every year the organisation must submit a letter (electronically) from their nominated accounting firm confirming that their donation truly represents 5% of revenue from sales of their 5% labeled product range
- The letter should be confirmed (by phone, or email) with the accounting firm by 5p4f
- The organisation can choose to make the amounts public, or to keep them private
Why do it this way? If we were to implement an independent system of auditing and make it a requirement of operation, then we would consume vast amounts of money that really belongs to the grower. This way, the manufacturer (who benefits from the extra sales generated by the label) carries a small extra cost.
Is it foolproof? No, but then no system will be completely (Exxon after all were audited every year). However, most people are honest (this is why banks can make money from lending), so by-and-large an accounting firm will represent a reasonably independent third party.
I will stress again my belief that to make a difference, this system must avoid the problems that plague existing NGO. One of the worst is funds donated getting siphoned off into bigger and bigger administrative structures.
Langdon
- Any organisation that joins must nominate their usual accounting firm as their assessor
- The accounting firm should be emailed a copy of the 5p4f guidelines so that they know what they have to do
- Every year the organisation must submit a letter (electronically) from their nominated accounting firm confirming that their donation truly represents 5% of revenue from sales of their 5% labeled product range
- The letter should be confirmed (by phone, or email) with the accounting firm by 5p4f
- The organisation can choose to make the amounts public, or to keep them private
Why do it this way? If we were to implement an independent system of auditing and make it a requirement of operation, then we would consume vast amounts of money that really belongs to the grower. This way, the manufacturer (who benefits from the extra sales generated by the label) carries a small extra cost.
Is it foolproof? No, but then no system will be completely (Exxon after all were audited every year). However, most people are honest (this is why banks can make money from lending), so by-and-large an accounting firm will represent a reasonably independent third party.
I will stress again my belief that to make a difference, this system must avoid the problems that plague existing NGO. One of the worst is funds donated getting siphoned off into bigger and bigger administrative structures.
Langdon
Replies to This Discussion
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Permalink Reply by Clay Gordon on
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I totally agree with this approach.
Nothing is foolproof, but the inherent value of this approach is that is resistant to systemic fraud. While one company and its accounting firm may try to misrepresent their responsibilities to the system, the failure is limited to that one member firm.
That's different from the situation where there is one auditor for the entire program and the auditor is corrupt.
Plus, it places the bulk of the cost of compliance on the member and its accountant, not the 5P4F.
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Permalink Reply by Langdon Stevenson on
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Great, glad you like it. I think that this is probably one of the most difficult issues to address (after distribution of money).
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