Archive for the ‘Not-for-Profit Organisations’ Category

Further to my post about proposed changes to the income threshold for charities in England & Wales to have their accounts audited, I can confirm the Statutory Instruments laid before Parliament will come into force for financial years ending on or after 31 March 2015:

audit stampAsset thresholds were not changed.

 

Here at George Hay, my charities team carries out regular and extensive professional development.  Whether your charity needs an audit or an independent examiners report, you can be rest assured that we have the experience to deliver.

The information provided in this blog illustrates my opinions and experiences, it does not constitute advice and I do not accept responsibility for any actions taken or refrained from as a result of reading this post.

If you found this post interesting/useful please share it with your social network and/or bookmark it.  Also, your comments are always valued and will help me to write new posts that are relevant to readers of this blog.

On 19th February 2015, the Cabinet Office published its response to the consultation on charity audit and independent examination.

It explained that 56 respondents contributed to the consultation that was initiated by recommendations made by Lord Hodgson in his review of the Charities Act 2006 and was concluded on 27th January 2015.  The resulting Statutory Instrument which sets out the proposed changes will be laid in Parliament on 30th March 2015.

It is thought that the changes will be effective for accounting periods ending on or after 31st March 2015, somewhat earlier than envisaged.

The key outcomes were:

  • the charity audit income threshold will rise to £1 million (from £500k)
  • the group accounts preparation and audit income threshold will also rise to £1 million
  • asset thresholds will stay the same.

These proposals were supported by the vast majority, but some of the respondents did object, commenting on what they considered a lack of scrutiny in independent examinations and inadequate training/experience of examiners.

Here at George Hay, my charities team carries out regular and extensive professional development.  Whether your charity needs an audit or an independent examiners report, you can be rest assured that we have the experience to deliver.

The information provided in this blog illustrates my opinions and experiences, it does not constitute advice and I do not accept responsibility for any actions taken or refrained from as a result of reading this post.

If you found this post interesting/useful please share it with your social network and/or bookmark it.  Also, your comments are always valued and will help me to write new posts that are relevant to readers of this blog.

.gov.ukIf you have tried to use the Commission’s website recently you will have noticed that you were redirected to .gov.uk.

Refresh or downgrade?

Along with most government run institutions like HMRC and DVLA, the Commission’s website has been moved to this umbrella site and been given the familiar black and white treatment. Unfortunately it also seems that what was a reasonable source of information with relatively user-friendly functionality has been dumbed down.

Guidance valuable

In a time when the commission has, due to budgetary pressure and criticism by the National Audit Office over performance, been instructed to act more as a regulatory body than a support organisation, the ability to find good quality guidance online is paramount to Trustees who take on an already onerous role without remuneration.

320px-SMirC-thumbsdown.svgWasted resource

Much of the expertise held by the team at the Commission is being wasted by redirecting resources to regulatory activities. This is a real shame and the ethos to “serve and add value” to the sector is definitely being compromised.

 

The information provided in this blog illustrates my opinions and experiences, it does not constitute advice and I do not accept responsibility for any actions taken or refrained from as a result of reading this post.

If you found this post interesting/useful please share it with your social network and/or bookmark it.  Also, your comments are always valued and will help me to write new posts that are relevant to readers of this blog.

After a considerable consultation period the Statement of Recommended Practice (SORP) for Charities 2005 has been replaced, with TWO new Charity SORPS!  These will need to be applied to accounting periods beginning on or after 1st January 2015.

Two Versions

between-two-options-151889594The first is for medium and large entities and will be referred to as the FRS102 SORP, after the accounting standard which has recently been introduced to bring the UK more in line with international accounting standards (IFRS).

The second, FRSSE SORP is based on pre-FRS102 requirements and can only be used by small entities as defined by the Companies Act 2006 i.e. it meets two of the following three criteria:

  • Income less than £6.5m
  • Assets less than £3.26m, and
  • Fewer than 50 employees.

These thresholds have recently been increased in the EU, so it is expected that they will increase in the UK too, in the near future.

Like using FRSSE for commercial enterprises, the FRSSE version of the SORP will require less disclosure, for example, it provides exemption from publishing cash flow statements and computing present values of long term intercompany balances.

Key changes

Lord HodgsonHowever the main purpose of updating the SORP was to provide guidance to Charities on how to apply UK accounting standards and to increase transparency of results, primarily as a result of Lord Hodgson’s review of the effectiveness of Charities in 2012.

Other than there now being two versions and both being split up in to “easy to read” modules, the key message as you might expect, is transparency and even more emphasis on impact reporting.

Other key points for those preparing the financial statements of charities to look out for are:

  • Holiday pay should be accrued for (FRS102 only)
  • If possible, income from donated goods should be valued
  • The definition of heritage assets has changed
  • Any grants to institutions must be disclosed
  • Related parties now include employees
  • The Trustees Report must be clear about reserves policies and state why they are held.
  • All Trustees must be listed, regardless of number

Finally, elements of the SoFA have been withdrawn, for example the governance costs category in the name of simplicity and others renamed such as “voluntary income” will now be shown as “income from donations and legacies”.  I am not sure this really provides any clarity, and most will chose to provide additional information in a note to the accounts instead.

Toni May2014More guidance

If you need more assistance there are some useful help sheets at http://www.charitysorp.org/ or of course you can call me on 01480 426500.

The information provided in this blog illustrates my opinions and experiences, it does not constitute advice and I do not accept responsibility for any actions taken or refrained from as a result of reading this post.

If you found this post interesting/useful please share it with your social network and/or bookmark it.  Also, your comments are always valued and will help me to write new posts that are relevant to readers of this blog.

The introduction of compulsory registration of all churches regardless of the excepted status has been delayed once again.

Compulsory Registration

The Charities Act 2006 (and now s.30 of the 2011 Act) stated that Churches would no longer be able to avoid registering with the Charities Commission and publishing their accounts in the public domain; but implementation of the new ruling seems to be a moveable feast.

The already extended deadline of 31st March 2014 is in the dim and distant past and a recent amendment to the Charities (Exception from Registration) Regulations 1996 suggests that the Commission will suggest giving further grace until at least 2021.

white churchWhat is an Excepted Church?

A charitable church is required to register with the Charity Commission unless it is exempt or excepted, with most being excepted.

This excepted status is achieved by proving that the charitable church is

  • used wholly or mainly for public religious worship,
  • has annual income of less than £100,000
  • already supervised by an oversight body (listed by the commission) that has clear guidance about the management and financial operations of the Church, and
  • not using the new CIO structure

Examples include most Baptist Churches, PCC (Parochial Church Council) and the FIEC (Fellowship of Independent Evangelical Churches) members.

The Commission has always had the power to demand that a church registers with them if they have reason to believe that further supervision is needed.

What will this change mean?

The short answer, additional compliance burden.

In a similar way to charitable companies being answerable to the demands of the Charities Commission/Charities Act and Companies House/Companies Act, previously excepted churches will have to report to their current oversight body and the Commission.

This will involve submitting accounts that consider the guidance of both their oversight body and the Charities SORP to both bodies.  They will also need to complete the Commission’s Annual Return.

In his 2012 review, Lord Hodgson recommended that the compulsory registration be phased over 3 years, by gradually reducing the £100,000 exception limit, but that suggestion has yet to be included in any Commission guidance.

Fortunately for me, the excepted Churches I act for are governed by the PCC whose accounting guidance closely reflects the SORP, so it should be a simple matter of filing the accounts and annual return with the commission.  Fingers crossed!

Further Guidance

If your charity or church needs guidance about it’s reporting responsibilities, please do not hesitate to give me a call on 01480 426500.

 

The information provided in this blog illustrates my opinions and experiences, it does not constitute advice and I do not accept responsibility for any actions taken or refrained from as a result of reading this post.

If you found this post interesting/useful please share it with your social network and/or bookmark it.  Also, your comments are always valued and will help me to write new posts that are relevant to readers of this blog.

52873351bc40c-The-Naughty-Step-Childrens-Wall-StickerThe Charity Commission has recently sent final warnings to over 70  charities, who have failed to submit annual reports or accounts for at least two of the last five years.

Previous warnings ignored

According to reports, each of the charities has an annual income exceeding £250,000; and have been contacted previously by the Charity Commission and were told that they will be tarnished with the “double defaulters” black mark if the continue to fail to meet reporting deadlines.

Charity status at stake

Those with this indelible black mark will with out doubt be top of the list when it comes to selecting organisations for inspection and could easily jeopardise their charity status if they fail to satisfy the Commissions inquiries.

Support is at hand

Always with you ! (Explore 19/5/13)As the holder of an ICAEW issued Diploma in Charity Accounting, I can help these forlorn organisations to get back on track, develop robust systems and to publish accounts that demonstrate public benefit and inspire stakeholders to continue their support.

Make sure your organisation’s charitable status is never in doubt. 

 

The information provided in this blog illustrates my opinions and experiences, it does not constitute advice and I do not accept responsibility for any actions taken or refrained from as a result of reading this post.

If you found this post interesting/useful please share it with your social network and/or bookmark it.  Also, your comments are always valued and will help me to write new posts that are relevant to readers of this blog.

The legislation enabling charities to use the “new” Charitable Incorporated Organisation (CIO) structure was laid before Parliament last October and is being slowly implemented during 2013.

The journey

Houses of Parliament, London, EnglandThe concept of a “simple” corporate structure was identified and debated when the Charities Act 1992 was first published and the CIO proposal developed during the late 1990’s.

The Home Office submitted a white paper entitled “Charities and Not-for-Profits: A Modern Legal Framework” in 2003 and the CIO structure finally became law as part of the Charities Act 2006, but it wasn’t until Lord Hodgson published his five year review of the Charities Act 2006 in 2012 and the Charities Act 2011 was issued that Parliament passed the CIO regulations for England & Wales and the Charity Commission could begin registering CIOs.

Still relevant?

The length of time taken to get to the current “implementation phase” has however dampened the initial enthusiasm for this new structure that enables Trustees to manage the activities and assets of the charity as a separate legal entity and benefit from limited liability, in the same way as a corporate entity, but without the need to comply with Company law.  I can see that this may be a reasonable option for a new organisation, but for existing charitable organisations (registered or not) I have yet to be convinced that the benefits outweigh the hassle, and if any form of finance is required, I don’t see it as an option at all.

Luton airport queues noticeSo far…

During January to May 2013 a mere 200 CIO’s have been registered, which I believe is partly due to the rather extended phased implementation, set out to assist the Charity Commission in dealing with the anticipated workload, but more likely the confusion over the tangible benefits of the new structure.

The future…

In 2014, Charitable Companies and Community Interest Companies (CICs) will be able to apply for CIO status, but considering the painful conversion process and the lack of understanding, particularly for those with debt finance, I doubt that the Commission will be dealing with a huge rush.

 

The information provided in this blog illustrates my opinions and experiences, it does not constitute advice and I do not accept responsibility for any actions taken or refrained from as a result of reading this post.

If you found this post interesting/useful please share it with your social network and/or bookmark it.  Also, your comments are always valued and will help me to write new posts that are relevant to readers of this blog.

Well it really depends on what you mean by paid.

Remuneration

your time is a valuable resourceIt is true that a Trustee can not be paid for the time and skills committed to assisting the charity.  This is to prevent conflicts of interest when a Trustees personal decisions are not necessarily in line with those of the charity, and ensures that the charity sector doesn’t ruin the trust it has built with the public with media stories of fat cat bonuses, like the banking sector are still trying to shrug off.

Expenses

California StreetA Trustee should not however, be out of pocket.  It is one thing to donate your time, thoughts and energy to the cause, but to be financially worse off as a result is recognised by the Sector, after all attracting highly skilled people to take on the time commitment and huge responsibility of Trusteeship is difficult enough.

It is therefore considered acceptable to reimburse such as travel to Trustees meetings and specifically identifiable telephone call charges.

It is imperative however that the governing document (usually a Memorandum and Articles of Association, a Trust Deed or a Constitution) allows this.  Many of these documents have not been revised since the origin of the charity and more often than not prohibit any payment of charity funds to Trustees.

If expenses are allowed then Trustees should be careful to ensure adequate controls have been designed and fully implemented so that their governance of charitable funds is not questioned.  Your auditor should be able to advise whether the systems in place constitute “adequate controls”.

Services

In the Charities Act 2011 which was implemented in phases between 2006 and 2011, it was acknowledged that in some circumstances it is perfectly logical and commercial for a Trustee to tender for work to be carried out for the charity.  For example, if a surveyor was a partner in a Chartered firm and a Trustee, it would be nonsense to engage the services of a different firm to offer advice regarding properties held, when the Trustee already knows the objectives of the charity, the opinions of the Trustees and the properties involved. He may even offer his professional services at a preferential rate.

Once again the Governing document may prohibit this, but assuming it doesn’t, the board must ensure that they are using charitable resources in the most effective manner and the Trustee in question must be removed from any decision making process in respect of his firm’s appointment.

Regulation

This is bound to be a focus point of Charity Commission scrutiny, so make sure you read the guidance on their website and liaise with your auditor before considering this.

It is also possible to obtain the Commission’s approval, which I would recommend if the amounts involved are substantial or relate to non-commercial circumstances such as compensation for loss of earning because the Trustee was required to attend a meeting.

The Commission also has the power to override the governing document, which may be useful if time does not allow for the document to be amended and approved.

The information provided in this blog illustrates my opinions and experiences, it does not constitute advice and I do not accept responsibility for any actions taken or refrained from as a result of reading this post.

If you found this post interesting/useful please share it with your social network and/or bookmark it.  Also, your comments are always valued and will help me to write new posts that are relevant to readers of this blog.

Question of moneyNow I know you don’t get many invitations to “double your money”, but read on, I’m not expecting you to enter a TV quiz show or participate in gambling activities…..

Doubling the impact

I am speaking about Matched Funding, a concept whereby a donation (plus gift-aid) to a specific charitable fund is matched by Government funding, so the amount of IMPACT it can make on local charities and community projects is effectively DOUBLED.

Local Foundation awarded matched funds

Late last year, I met Jo Abel, Development Director at CCF (Cambridgeshire Community Foundation : charity number 1103314) who introduced me to the concept of named community trust funds that help philanthropic individuals and businesss (large and small) to build relationships with and financially assist local projects and communities, thus creating a more dynamic impact.

There are many advantages to understanding what a Community Foundation does, so have a browse around their website.

 

Jo wrote:

The Cambridgeshire Community Foundation are pleased to report that the Government are investing in a £50m matched fund to incentivise the building of local endowment funds to create a sustainable source of local grants for the future. 

They want to ‘encourage more people to get involved and work together to improve our communities.

The opportunity to influence the world around you, to feel connected, to be able to make a contribution, and to trust hose around you – these are the some of the most important contributors to our well-being. They form the foundation of both our society and economy.’

The Government partners for their ‘Community First’ initiative are Community Development Foundation and the Community Foundation Network.

As part of the national network of Community Foundations, CCF will be able to offer their Private Sector Donors a 50% fund match through this Government scheme.  Donor funds will need to be invested as Endowed Funds for 4 years before any of the funds can be used for grant-making in the Cambridgeshire area.  Despite these restrictions, we feel that this will provide a good incentive for philanthropic individuals or families who wish to make a lasting impact in the community where they and their families live, to create their own charitable fund, or increase their existing fund.  Once matured, the fund will be used to issue grants to community groups, organisations and charities, carefully selected and vetted by the Foundation, which address the needs the Donor has requested to support, or which fall into the areas of the Donor’s or which inspire their charitable passions.

As your local Community Foundation, we are ourselves a charity, dedicated to strengthening our community.

To that end, we target grants that make a genuine difference to the lives of local people.  We manage funds donated by individuals and organisations, acting as the vital link between local donors and local needs, connecting people with causes, and enabling individuals to achieve far more than they ever could by themselves.

Importantly, we’re independent and ‘cause neutral;  In providing you with expert advice and the benefit of our local knowledge, our only agenda is to help you ensure your giving makes a lasting impact in the areas that you care most about.


If you are interested in finding out more about the Cambridgeshire Community Foundation, or the Government Match Scheme, please contact Jo Abel on:

01223 410535  jo@cambscf.org.uk

 

Alice in Wonderland: White Rabbit - Who Killed Time?Time is short

Time is of the essence, as £117,000 of this funding is available to CCF for use locally, until the end of March 2012, if it is not matched, the opportunity is lost.

A second tranche has been promised, but this will be at 50% and details are yet to be clarified.

DON’T LOSE OUT ON THE CHANCE TO SPEND GOVERNMENT MONEY ON OUR LOCAL COMMUNITY

 

 

Update 23.03.2012 :  Good News

With days before 31 March deadline, we are delighted to have received the support of donors who have enabled us to meet the  2011-2012 Cambridgeshire Community First Endowment Match target.  The new donations and the 100% match have increased our endowed funds by over £380,000.

Whilst the 100% match is now complete, a 50% uplift is available from 1 April 2012 for the next three financial years.

The 50% match offers a 50% higher rate tax payer the chance to receive a 280% uplift on their donation into a ‘family controlled charitable fund’ – which is used to support local charitable projects.

As one of our new donors said “The match offered me a great incentive to set up a family controlled endowment fund with CCF.  I plan to involve my children so they can develop an interest and understanding of local charitable giving, and then take over the running of the Fund from my wife and I when the time comes”.

 

The information provided in this blog illustrates my opinions and experiences, it does not constitute advice and I do not accept responsibility for any actions taken or refrained from as a result of reading this post.

If you found this post interesting/useful please share it with your social network and/or bookmark it.  Also, your comments are always valued and will help me to write new posts that are relevant to readers of this blog.

 

Trustees Liability

In the past trustees have been worried that they may be personally liable for mistakes they make which put charitable assets at risk.

The Charities Act 2006 (which is still being implemented in phases) introduces two small but important changes.

Indemnity Insurance

If trustees act prudently, lawfully and in accordance with their governing document, then any liability trustees incur may be met by the charity’s resources.

Charities can take out insuracne to cover such circumstances.

Any breach of trust will result in the trustee being personally responsible fpr making good any loss to the charity.  Since trustees are acting  as a collective governing body, they will usually be jointly and severally responsible.

Personal Liability Insurance

Risk is when an outcome’s probability is known. Uncertainty is when an outcome’s probability is unknown.Trustees are now able to procure trustee indemnity insurance using the charity’s funds, to protect them from personal liability to third parties.  This is still deemed to be a trustee benefit but it is no longer a requirement to gain permission from the Charity Commission provided that the governing document does not prohibit it.

Fair use of charitable resources?

Trustees need to consider the nature or the charity’s activities, the degree of risk to which the trustees are exposed, the number of trustees to be covered and the cost to the charity of paying the premiums when deciding whether insurance is a good use of resources.

Of course, there is nothing stopping trustees from arranging and paying for their own policies.

 

The information provided in this blog illustrates my opinions and experiences, it does not constitute advice and I do not accept responsibility for any actions taken or refrained from as a result of reading this post.

If you found this post interesting/useful please share it with your social network and/or bookmark it.  Also, your comments are always valued and will help me to write new posts that are relevant to readers of this blog.