Submission In furtherance of clarifying the audited accounts of Brisbane Grammar School for Year End 2016, it is submitted as follows : 1. Points you raise in communication 12 April 2017 are duly noted. It is not clear how many victims are represented in an overall settlement figure of $2,967,000 for the year 2016. It is put forward that this value is likely to only represent a handful of victims, given the large numbers who have yet to receive any such settlement and or seek a review of previous settlements. 2. It is not clear if any insurance has now been recovered on the settlement amount of $2,967,000 by Brisbane Grammar School. There is no notation to account for insurance being recovered on this amount. This would certainly be very troubling for victims and the School to continue as a “Going Concern,” if insurers were now declining to settle claims on those insurance policies held by Brisbane Grammar School. There is very good reason to believe that insurers are most certainly now declining claims. 3. In your response it appears you have not directly interrogated the financial situation of Brisbane Grammar School and are simply taking the Schools word at face value. Under the circumstances a full examination and interrogation surely is required of the Qld auditor when questions are now being asked by victims as creditors of the School. Large numbers of claims remain unsettled and or a refusal to reconsider previous settlements. 4. All claims against Brisbane Grammar School have now fallen due. This is particularly so, as the Royal Commission has published a final report on 15 February 2017. Adverse finding against the School, most certainly and legally require the institution to now accept the liability and not shirk the obligation and legal responsibility. Victims should not be failed again by an institution that has failed so many and seems so unwilling to settle debts that have now fallen due. 5. In your response you have not addressed specific issues in relation to certain payment settlements that are well outside the original mediation settlement framework of 2002. There is evidence Brisbane Grammar School Chair, Mr Howard Stack acting on behalf of Trustees has offered an opportunity to the victim known as BQG for a review of a previous settlement. A similar offer has not been forthcoming to all other victims as creditors. This calls into question the fairness of treatment of all creditors seeking recovery of financial losses against Brisbane Grammar School. 6. The Board of Brisbane Grammar School may say they are complying with requirements and have settled over 100 claims. This is certainly not the experience, by so many victims who’s claims have been refused by Brisbane Grammar School. This includes large numbers of victims who have previously settled during the 2002 mediation on “Good Faith, but who seek similar consideration as was given to BQG of a review. 7. Large numbers of claims were settled in 2002 on the pretext that Brisbane Grammar School did not know about allegations of sexual abuse. There is a legal obligation for Brisbane Grammar School to accept all claims should now be reviewed without any further hesitation, given the adverse findings by the Royal Commission. Previous settled claims were settled under “False Pretext.” It would be wrong in law for Brisbane Grammar School to refuse to review all claims, even if it may result in the School becoming technically insolvent. 8. It is all very well to simply make a generalized statement in the accounts as per Note 18. However if victims can assess in all likelihood the financial implications and liability are now almost certainly in the order of $50 million to settle each and every claim satisfactorily, then best practice as highlighted in the Australian Accounting Standards would be for the School to clearly establish a framework of setting aside provision for contingent liabilities in order to adequately account for the debt that has become a reality, since the publication of adverse findings in Royal Commission Case Study 34. Note 18 contingent liabilities and contingent assets. The note states – “ At the date of this report, it is not possible to accurately quantify the timing or amount of any future settlements in regard to potential future claims nor the level of insurance that may be available to the School to assist in their settlement.” 9. It is not clear from the submitted accounts if the Brisbane Grammar School is using Provisions, Contingent Liabilities and Contingent Assets Standards 2014-2018 AASB 137 or have migrated to the new framework that officially commences January 2018. However on assessing the specific standards, provision of contingent liabilities ought now be accounted for in the Schools accounts with a financial value set-aside in the current accounts. That is given the Royal Commission have published adverse findings against the School since end of 2016 year. The statement as submitted does not give a true and accurate picture of the extent of the financial liability and the obligations. The statement gives a very misleading financial picture of the Schools ability to pay those debts when they fall due and they have now fallen due. 10. The question for the Queensland Auditor is what sort of message does it send to young and impressionable minds of scholars attending Brisbane Grammar School, if all that is needed in an institutions accounts is such a simple statement as Note 18 that absolves the liability, almost as if it is non-existent? In truth the liability does now exist and should be adequately account for 11. It is not as if Brisbane Grammar School did not know that significant liabilities extending into the multi-millions could be anticipated, as a final outcome of the Royal Commission. One of the overarching terms of reference of the Royal Commission is some form of Redress Scheme for victims. This is clearly documented by the Royal Commission with a consultation paper published on the 30 January 2015, now more than over 2 years ago. From consultations and further publications a figure of $250,000 had been suggested by the Royal Commission. It is not unrealistic to expect victims who attended Brisbane Grammar to seek recovery of financial losses of such magnitude and likely significantly north of this amount. http://www.childabuseroyalcommission.gov.au/policy-and-research/redress/final-report-redress-and-civil-litigation 12. Prudent financial accounting should have been preparing the School for the day contingent liabilities actually fall due and provision needs to be made in the accounts. The liability most certainly could be calculated, as there has been much discussion over recent years of institutions being held liable for significant future costs. Brisbane Grammar School elected not to even calculate and set aside provision for such an eventuality is not an acceptable excuse. It calls into question the Trustees ability to adequately manage the finances of the School. 13. You have not commented on Brisbane Grammar School’s lack of reporting of a “Material events” subsequent to the year end. The publication of the Royal Commission’s findings in Case Study 34 was published after the year end of 2016. Surely this is a “Material Reporting Event” that ought to be highlighted in the most recent accounts? This is particularly so as the findings of the Royal Commission in Case Study 34 are somewhat different to the terms of legal settlement agreements Brisbane Grammar previously reached with significant numbers of victims. 14. There is likely no need to highlight, as an auditor you should be fully aware of the Australian Accounting Standards in relation to AASB 110 “Events After the Reporting Period.” However for simplicity note Paragraph 8 and 9 of Australian accounting standard. As an auditor, Best Practice would be for the School to accept that the Royal Commission findings now require Brisbane Grammar School to at least account for and adjust contingent liabilities by stating a calculated fair value of those liabilities and not pretend they do not exist. Adjusting events after the reporting period 8 An entity shall adjust the amounts recognised in its financial statements to reflect adjusting events after the reporting period. 9 The following are examples of adjusting events after the reporting period that require an entity to adjust the amounts recognised in its financial statements, or to recognise items that were not previously recognised: (a) the settlement after the reporting period of a court case that confirms that the entity had a present obligation at the end of the reporting period. The entity adjusts any previously recognised provision related to this court case in accordance with AASB 137 Provisions, Contingent Liabilities and Contingent Assets or recognises a new provision. The entity does not merely disclose a contingent liability because the settlement provides additional evidence that would be considered in accordance with paragraph 16 of AASB 137. 15. The published sequences of events in the 2016 Account clearly demonstrates that the full Board of Trustees of Brisbane Grammar School could not possibly have approved the end of Year 31 December 2016 Accounts, as the accounts are clearly signed off by the auditor J F Walsh on the 28 February 2017. This is after they had already been signed off on the 24 February 2017 by Mr Howard Stack acting as Chair and Mr Howard James acting as Secretary on behalf of Brisbane Grammar School and submitted to the Minister on the 25 February 2017. The sequence of events from the published accounts is identified as 24 Feb 2017 – Accounts signed off by Mr Stack and Mr James 25 Feb 2017 – Accounts submitted to the Minister 28 Feb 2017 – J F Walsh as delegate Auditor General of Qld Signs off accounts 16. In summary victims as creditors are certainly not satisfied that the published accounts adequately provide a true financial picture of Brisbane Grammar School to now settle the debts that have now fallen due. It is very doubtful the School can now full settle all claims against the School and your response gives no reassurance that the School can now settle the debts. The fact the School continues to deny settlement including refunding School Fees attests to the fact that liabilities are not being settled. 17. A more detailed response is requested form the Qld Auditr in order to reassure creditors that the School can in fact settle all debts that have now fallen due. Statement to the Qld Auditor General made by Victims in Royal Commission Case Study 34 Contact by Email : lynchvictim@gmail.com