Irish Chrities Tax Reform Group Conference 9 November 2005 Presentation by Lorcan Colclough, ACA Partner, Mazars

2 Introduction  Regulation is long overdue  Sector will benefit

3 Focus of legislation should deal with  Definition of a Charity and charitable purpose  Register of Charities  Appropriate regulatory framework

4 Balanced legislation  Balance between proper accountability and allowing Charities to continue to be dynamic and without undue bureaucracy

5 SORP  Statement of Recommended Practice (SORP) - Accounting and Reporting by Charities  Charities Commission in the UK / Accounting Standards Board (ASB)

6 Role of SORP  Key role to play.  Objectives of SORP.  Who does it apply to?

7 Charity accounts should comprise:  Statement of Financial Activities  Income and Expenditure Statement (in certain cases)  Balance Sheet  Cashflow Statement (in some cases)  Notes to the accounts

8 Trustees Annual Report  Reference and administrative details  Strategic governance and management  Objectives and activity  Achievements and performance  Financial review  Plans for the future

9 Funds of a Charity

10 Accounting Policies  Incoming resources policies  Resources expended policies  Asset policies  Fund Structure Policies

11 Filing of Accounts  In the UK they have to be filed with Charity Commission  Similar regime anticipated in Ireland  SORP is likely to be mandatory

12 One Size Fit All  No  Important that thresholds are correctly set

13 UK Thresholds  Preparation of accruals accounts  Gross income is greater than: England and Wales£100,000 (€150,000) Scotland£25,000 (€37,000)  No concession for small charitable companies

14 Audit Threshold for Charities  Gross income is greater than: England and Wales£250,000 (€365,000) Scotland£100,000 (€150,000)

15 Financial Reporting Standard for Small Entities (FRSSE)  Further exemption for Charities who prepare accruals accounts and audited accounts  Two of three conditions: UK Turnover£5.6m (€8.25m) Balance Sheet Total£2.8m (€4.1m) Employees50  Ireland has much lower FRSSE exemptions

16 Conclusion  Regulation is needed  Regulation is to be welcomed by Sector  Most Charities are well prepared  SORP is likely to be mandatory  Correct exemption limits are needed