© MHA MacIntyre Hudson 2015 Presented by Helen Blundell June 2016 SORP 2015, the move to FRS102

© MHA MacIntyre Hudson 2015 SORP 2005 to SORP 2015 SORP 2015 (FRS102) SORP 2015 (FRS102) SORP 2015 (FRSSE) SORP 2015 (FRSSE) SORP 2005 Year ends beginning on or after 1 Jan 2015 Year ends beginning on or after 1 Jan 2016 Update bulletin 1 SORP 2015 (FRS102) SORP 2015 (FRS102)

© MHA MacIntyre Hudson 2015 Confirms that larger charities are those with income > £500k (and not those subject to audit) Charities below £500k income do not need to prepare a cash flow statement Extends definition of related parties Some small tweaks/clarifications in: Donated goods, facilities and services Accounting for groups Impairment of assets Charity mergers Update bulletin 1

© MHA MacIntyre Hudson 2015 Transition dates Applies for year ends beginning on or after 1 January 2015 Comparatives must be restated on same basis therefore – Figures at 31 December 2015 (or 31/3/16) – Figures at 31 December 2014 (or 31/3/15) – Figures at 31 December 2013 (opening position) (or 31/3/14) or if applied FRSSE SORP for 1 year then dates move forward by one year

© MHA MacIntyre Hudson 2015 Key Points MUST – if don’t do, not SORP compliant! Should May

© MHA MacIntyre Hudson 2015 Trustees report no changes SOFApositioning of investment gains and losses Balance sheetno presentational difference, values affected by accounting treatments in some areas Cash flownew unless eligible to adopt Update exemption Other areasdonated goods, discounting liabilities > 1 year, recognition of holiday pay accruals, additional related party disclosures, heritage assets, social investments, valuation options, leases FRSSE to FRS102

© MHA MacIntyre Hudson 2015 Definitions Fair value The amount at which an asset or liability could be exchanged or settled in an arm’s length transaction between informed and willing parties Discounted present value Calculation of time value of money FRS102 - calculate with reference to market rate (ie rate at which could borrow) (FRSSE referred to UK Government bonds) 7

© MHA MacIntyre Hudson 2015 FRSSE Total incomeA Expenditure Raising fundsB1 Charitable expB2 OtherB3 Total expenditure Net income/expend TransfersC Gains on f.a revalnD1 Net gain/loss on invs D2 FRS102 Total incomeA Expenditure Raising fundsB1 Charitable expB2 OtherB3 Total expenditure Net gain/loss on invsB4 Net income/expend TransfersC Gains on f.a.revalnD SOFA

© MHA MacIntyre Hudson 2015 Fixed assets and stock Fixed assets transitional revaluation can then be used as ‘deemed cost’ – uplift opportunity? Stock held for free distribution – include at fair value as adjusted to reflect lower of deemed cost adjusted for loss of ‘service potential’ and replacement cost Goods provided free as part of charitable activity should not be written down to nrv but included based on service potential 9

© MHA MacIntyre Hudson 2015 Investments Value initially at cost then at fair value Social investments separate class Investment properties - regular valuation by independent expert Mixed use property – apportioned unless impractical Property let by/to group - investment

© MHA MacIntyre Hudson 2015 Heritage assets historical, artistic, scientific, technological, geophysical or environmental qualities contributes to knowledge and culture through its retention and use accessible to the public for viewing and /or research Cost or valuation Dropped link to charity objects- potential to capture more

© MHA MacIntyre Hudson 2015 Concessionary loans made/received > 1 year – either – Amount outlayed less repayment and adjusted for interest and impairment, or – Fair value and then amortised cost using effective interest method Grant commitments likely to be settled more than 12 months after recognition – calculate net present value Loans and grants

© MHA MacIntyre Hudson 2015 Pension liabilities Multi employer schemes where agreement to make additional contributions on current/past service of employees – liability must be recognised for the present value of outstanding additional contributions

© MHA MacIntyre Hudson 2015 Cash flow statement If income < £500k then optional for year ends beginning on or after 1 January 2016 (or 2015 if early adopt Update and applying FRS102) Cash flows from operating activities Receipts/payments not falling under the other headings Cash flows from investment activities Cash receipts from interest/dividends received Cash receipts from rental income Cash receipts/payments from purchase/sale of fixed assets/investments From financing activities Cash receipts from donations of endowments Cash receipts from new loan borrowing Cash repayments of borrowing such as loans and mortgages Cash payments re finance leases Remember to adjust out for non-cash movements (ie depreciation, gifts in kind)

© MHA MacIntyre Hudson 2015 Expenditure Lease incentives - spread over the total lease (rather than as currently to the break clause) Holiday pay accrual

© MHA MacIntyre Hudson 2015 Related parties Trustees (and offspring, (grand)parents, siblings) Officer, agent or member of key management personnel of charity Donor of land to the charity Spouse of any of the above Business partner of any of the above Person or close member of person’s family who has control/joint control of charity or significant influence over charity Update bulletin Entity which provides key management personnel to the charity

© MHA MacIntyre Hudson 2015 Related parties Unless immaterial, total of expenses waived by trustees must be disclosed Total donated by trustees must be disclosed (if unrestricted giving) Restricted giving by trustees must be disclosed separately Redundancies/termination payments for any staff Total paid (including benefits) to key management personnel Contributions to pension schemes

© MHA MacIntyre Hudson 2015 Window of opportunity – but be clear on the benefits and longevity Statement of cash flows Restating comparatives and collecting data (especially new items) Extra work and additional information (e.g. discounting) Transition

© MHA MacIntyre Hudson 2015 Funds received as agent or custodian trustee Accounting for groups/consolidation Charities as subsidiaries Retirement benefits Other specific modules

© MHA MacIntyre Hudson Helen Blundell Further information