cipfa.org.uk Charity accounting … … opportunities … John Maddocks

cipfa.org.uk The charity landscape  Over 160,000 charities in England & Wales  Most charities are small  Over 123,000 (75%) income < £100,000  Over 143,000 (87%) income < £500,000  Over 900,000 trustees  Over 2,600,000 employees  Over 1,900,000 volunteers Source: Charity Commission Dec 2013 statistics

cipfa.org.uk Legal structures Legal formGoverning document Other regulator AssociationConstitutionNo TrustTrust deedNo CompanyMemorandum and articles of association Companies House Industrial & Provident Community Benefit Society RulesFCA Charitable Incorporated OrganisationConstitution No

cipfa.org.uk Legislation & regulation  The Charities Act 2011 consolidated the 1993 Act and other related enactments  Charities (Accounts and Reports) Regulations  Charity Commission is the registrar and regulator for charities in England and Wales  Other legislation and regulation depending on legal structure

cipfa.org.uk Annual returns  Income > £10,000, file Annual Return within 10 months of end of financial year  Income > £25,000, accounts attached  If charity is also a company, then a Company Annual Return also has to be completed  Accounts to Companies House within 9 months

cipfa.org.uk Annual statement of accounts  Trustees responsible for preparation of accounts  Gross income of £250,000 or less – can opt for receipts and payments accounts but only if:  Unincorporated or  CIO  Other registered charities comply with the SORP

cipfa.org.uk Charities SORP accounts include …  Trustees’ report  Statement of Financial Activities (SOFA)  Summary income & expenditure account (in certain cases)  Balance sheet  Cash flow statement  Notes to the accounts  NEW SORPs due out summer 2014 (FRS102 & FRSSE)  For implementation January 2015 

cipfa.org.uk Annual audit or examination  Charity regulations set out thresholds for audit and independent examination  Thresholds can be amended in future  Three types of assurance: a.Audit b.Independent examination by someone on prescribed list (income up to £500,000) c.Independent examination by someone with requisite ability income (income up to £250,000)

cipfa.org.uk Independent examiners Income up to £500,000 & assets under £3.26m. Prescribed bodies:  Institute of Chartered Accountants in England and Wales  Institute of Chartered Accountants of Scotland  Institute of Chartered Accountants in Ireland  Association of Chartered Certified Accountants  Association of Authorised Public Accountants  Association of Accounting Technicians  Association of International Accountants  Chartered Institute of Management Accountants  Institute of Chartered Secretaries and Administrators  Chartered Institute of Public Finance and Accountancy  Fellow of Association of Charity Independent Examiners

cipfa.org.uk Audit or independent examination Gross income and asset thresholds AuditInd exam (listed) Ind exam (ability) More than £500,000 or assets over £3.26m YesNo £500,000 or lessYes No £250,000 or lessYes Guidance at:

cipfa.org.uk Fund accounting Restricted Endowment funds PermanentExpendable Restricted income Unrestricte d General funds Designated funds

cipfa.org.uk Charity trading  Understanding  Primary purpose trading. Directly in furtherance of the charity’s objectives.  Ancillary trading. in support of the main purpose.  Small scale trading  Trading subsidiaries  VAT business and non-business

cipfa.org.uk Associated services  Payroll  HR and Employment law  Tax  Business planning

cipfa.org.uk Current CIPFA activity includes …  Charities and social enterprises panel  TISonline – new charities & social enterprises stream  CIPFA Certificate in charity finance and accountancy  CIPFA Certificate in financial reporting for academies  Courses & workshops: Charity accounting, commissioning, diploma in sustainable investment in 3 rd sector  Research: International NFP accounting standard  Publications

cipfa.org.uk CIPFA resources include …  TISonline: Charities & social enterprises  Social enterprise and public service delivery (new edition in 2014)  Accounting for academies (2013)  Social enterprise business planning & assessment (2013)  Accounting for payment by results including social impact bonds (2012)  Financing social enterprise (2012)  Staff mutuals (2012)

cipfa.org.uk Questions?  TISonline: Charities and social enterprises stream  Charities & Social Enterprises Panel: Panels-and-Boards/Charities-and-Social-Enterprises- Panel 