Pro bono work can be immensely rewarding and valuable to the community and causes that benefit, and from time to time Chartered Accountants will come across this type of work.

You may help as a treasurer, accountant or auditor for a charity, school P&C, church or sporting club without payment or simply supporting friends and family.

However, you need to take the same care with your pro bono work as you do with your paid work – considering your professional, ethical and legal obligations and any potential risks.

Three dangerous pro bono myths to watch out for

Myth 1: “It’s only a not-for-profit organisation so the work should be pretty straight forward.”

When taking on pro bono accounting work, members sometimes forget that the Code of Ethics is still relevant and binding – whether or not you’re getting paid. Sometimes work for a not-for-profit can be more complex than appears at first glance.

Our team of professional and ethical experts often receive calls from members who have encountered these types of fraud in charities or not-for-profits:

• Personal use of charity funds that range from food stock intended for an organisation but used personally, to large amounts of charity funds used for personal expenses.
• Cash theft at sporting events and school canteens.
• Related party transactions where the organisation has been overcharged or the paid-for products or services haven’t been provided.

What’s more, charities and not-for-profit organisations are regulated. In Australia registered charities are regulated by the Australian Charities and Not-for-profits Commission (ACNC). The ACNC require charities to submit signed-off financial documents each year. Similarly in New Zealand registered charities must file with Charities Services. In Australia and New Zealand a variety of other regulations apply to charities and other not-for-profits depending on their type and size, so you’ll need to understand the specific compliance requirements for each organisation. 

Myth 2: “I’m not charging for my services, so I won’t need Professional Indemnity (PI) Insurance.”

It’s true that if you’re not charging for your services, you aren’t usually required to hold a Certificate of Public Practice (CPP). Check the CPP requirements in Regulation CR 2 – Certificates of Public Practice in Australia and NZICA Rules in New Zealand to confirm your activities are excluded. And in turn, if you’re not required to hold a CPP, you’re not required to hold professional indemnity (PI) insurance. 

However, you still need to assess your personal liability for the services you’re providing. That’s why CA ANZ encourages you to take out PI insurance cover, so you’re insured against potential claims.

Australian members, to help you get started, at the end of this article we’ve provided links to a list of PI insurance suppliers. If you’re looking for an affordable PI insurance policy, we’ve listed PI insurance brokers that could be a good option for you. 

Myth 3: “There’s no way friends and family will sue me if I’m doing free work for them.”

Just because you don’t charge doesn’t mean that you won’t be liable for poor quality work or advice that causes financial loss. Sadly, some of the most bitter disputes arise within families or between friends. Before you take on pro bono work, ask yourself:

• Do I possess the qualifications and experience needed to work at the level required? For example, do I need to hold specific registrations?
• Do I fully understand what’s required by regulators and do I have the competency and the insurance to provide this service?
• Do I have a conflict of interest?
• Am I independent when I take on an audit or review engagement.
• What about insurance? Should I take out some level of cover?

There can be higher risks associated with not-for-profit entities because of limited resources or unique issues. The likelihood of errors or opportunities for internal and external fraud may be greater.

Take the time to do a risk assessment before you commit. There can be higher risks associated with not-for-profit entities because of limited resources or unique issues, such as:

• Outdated record keeping and accounting systems.
• Volunteers may lack technical knowledge and turn over frequently.
• Separation of duties between staff may be inadequate.
• Large amounts of cash flowing in and out of the entity.

For these reasons the likelihood of errors or opportunities for internal and external fraud may be greater for not-for-profits.

How your engagement letter can help

A standard that’s often overlooked when taking on pro bono work is APES 305 Terms of Engagement (Australia) or PS-3: Terms of Engagement (New Zealand). Even though you’re not charging for the work, you should document the engagement, preferably in an engagement letter. Clearly specify the scope, timeframes, responsibilities and expectations of both you and the client. By addressing issues such as the provision of records and information, you’ll be able to do the work efficiently and effectively.

As you join other Chartered Accountants who support the community with pro bono work, approach unpaid work with the same diligence and professionalism that you apply to your paid work.