Charity Connect – July 2015
Charity reporting: where have we got to?
The new UK GAAP charity SORPs (SORP FRS102 and SORP FRSSE) apply to periods beginning on or after 1 January 2015. However, changes to UK GAAP due to take effect from 1 January 2016 mean that the SORPs will also need to be updated.
In particular, the FRSSE is being withdrawn from UK GAAP so the charities SORP FRSSE cannot apply for reporting periods beginning on or after 1 January 2016. A replacement solution is needed and a consultation on the proposed changes is currently taking place (until September 2015).
The proposals include withdrawal of the FRSSE SORP so that all charities would apply SORP FRS102. However, the cashflow statement required by SORP FRS102 will only be required for large charities (those with income of £500k or more).
If you are worried about how the withdrawal of FRSSE SORP will impact your charity, please don’t hesitate to get in touch with your usual HLCA contact and we would be happy to discuss the specifics applicable to your organisation.
Top 10 accountancy challenges for charities
Jandy Stevenson comments in CA Magazine on the top 10 accountancy challenges for charities including: the new SORP; operating a trading subsidiary; managing risk; avoiding conflicts of interest; ensuring delegation processes are fit for purpose; determining the appropriate level of reserves; fraud; auto-enrolment; gift aid; and VAT.
New guidance available
The Charity Finance Group has published its latest small charities finance update, with information on financial best practice and insights from finance professionals. Topics this time include “Is your funding a grant or a contract?”, “The new SORPs explained”, “Managing staff during a restructure” and “Navigating the pension maze”.
The Charity Commission have released new accounting guidance for English and Welsh charities on charity accounting: Charity reporting and accounting: the essentials March 2015 (CC15c).
OSCR’s new monitoring system
Following a consultation on Targeted Regulation, OSCR published a summary report earlier this year on their plans and they are now developing the procedures, processes and IT platform necessary to turn their vision into reality. It may yet be several months before changes are seen and some things will not be implemented until 2016/17 but changes planned include:
- Advancing the project to publish charity annual reports and accounts online (all accounts with income over £25,000 and all accounts of SCIOs regardless of size)
- Publishing information on areas of focus
- Making changes to the questions asked in the Annual Return
- Issuing guidance for smaller charities on good practice in preparing accounts
- Developing an internal trustee database
- Developing a more holistic approach to reviewing charities
- Initiating a serious incident reporting regime
- Redirecting additional resources to tackling charities who persistently default on their annual returns and accounts
- Increasing the online service offering
Key changes in employment law
There have been several key changes in employment law since the start of the year including amendments to:
- Shared parental leave
- Adoption leave
- Unpaid parental leave
- Holiday pay entitlement
Parents of children born or adopted on or after 5 April 2015 fall under the new system of shared parental leave. Eligible employees may take up to 52 weeks leave and 39 weeks statutory pay which can be shared between the parents.
Adopters are now generally entitled to the same rights as mothers taking maternity leave and also have new rights for time off for adoption appointments.
Unpaid parental leave (up to 18 weeks) can now be taken up until the child is 18 rather than age 5 as was the case previously.
In relation to holiday pay, we detailed in our last newsletter how recent Employment Appeal Tribunal Decisions from the Court of Justice of the European Union could have a significant impact on the way holiday pay should be calculated. As well as basic pay, other amounts including certain overtime, commission, incentive bonus payments and stand-by/ emergency call-out payments, should also be included in the calculation of holiday pay. Organisations whose employees receive payments beyond basic pay during their employment but only receive basic pay when on holiday could be affected and claims may be received from employees in relation to back pay. The government have introduced new legislation such that claims made on or after 1 July 2015 are limited to two years’ back pay. Employees still need to show a series of deductions or underpayments during that period, and any disruption in this of three months or more will break the period under consideration.
Should we consider cloud accounting?
Some of the benefits of cloud accounting for charities include mobile access as standard so the financials can be worked on from anywhere and also that a real time snapshot of the charity’s financial position is available, so that up to date financial information can be easily shared with management and trustees.
We are a silver partner with Xero, a cloud accounting software provider offering as they describe it ‘beautiful accounting software’. They offer a 25% discount for charities. Some of the key benefits of this package is the cost and how easy it is to use with functions to radically cut inputting and processing time for staff. For example, it offers direct importing of transactions from your bank which are then ready to be coded. This means less time spent inputting data and fewer errors to correct when reconciling the bank. It also holds the back up to transactions on the cloud therefore saving storage space.
If you are interested to find out more about Xero, please contact Andy Niblock (email@example.com). We would be pleased to offer a free consultation and a free trial of the software.
Large charities urged to test their resilience against fraud
The Charity Commission is encouraging charities with income > £1m to make use of a free tool aimed at helping them assess their resilience against fraud. The Self-Assessment Fraud Resilience (SAFR) Tool is based on 29 questions, which allows an organisation to establish:
- How well it understands the nature and cost of fraud
- Whether it has an effective strategy to address the problem
- Whether it has a counter-fraud structure which helps it implements its strategy
- Whether it takes a range of pre-emptive and reactive action to counter fraud
- The extent to which fraud is addressed and managed like any other business issue