Wednesday 31 January 2018
Why Does My Accountant Need to Know THAT?
WYCAS accounts clients who have brought records in to us recently may have noticed that the items we request on the checklists have changed slightly. So what has been added and why?
1. Information about the charity’s Key Management Personnel (for accruals accounts)
This has been added because under the current accounting standards the related party transaction note to the accounts now needs to disclose the total benefits, (e.g. gross pay plus employer pension contributions etc), for the ‘Key management personnel’. KMP are defined as 'Those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including any director (whether executive or otherwise) of that entity.' This definition includes trustees and those members of staff who are the senior management personnel to whom the trustees have delegated authority, or responsibility, in the day-to-day running of the charity.
In the note we don’t need to show anyone’s name and we can add together the total amounts if more than one person is included. It could include managers or any paid trustees. So you need to think about who those people are and tell us. It may be that all key decisions are taken by trustees without delegating anything to managers in which case there would be no note, as there are no employment benefits paid to trustees. If this is the case state it on the checklist.
2. The budget for the following financial year / other evidence that it is financially sustainable
This has been added as the new directions and guidance for independent examination of a charity, (which are published by the Charity Commission), include a new direction that the independent examiner must check whether the trustees have considered the financial circumstances of the charity at the end of the reporting period.
Seeing a budget for the following year is evidence of that assessment and the minutes will provide further evidence. Note that this is only needed where an independent examination is being done.
Note: It is also worth being aware that the independent examiner has always had a statutory duty to report matters of material significance to the Commission but there are 9 matters which are always regarded as reportable, including a qualified independent examiner’s report. We would need to report the nature of the qualification with supporting reasons including notification of the action taken subsequent to our work.
Of course if you have any problems or uncertainties in completing the checklists you can discuss these with your accountant. A fully completed checklist saves your accountant time and therefore keeps your accounts fee as low as possible!
The new independent examination guide can be found here.
And the Charities SORP (following FRS 102) here.
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Detailed Guide: Change Your Charity Structure
The Charity Commission have updated a section of guidance about converting a charitable company to a CIO - in line with legislative changes from January 2018. It will first be available to those charitable companies with an annual income of under £12,500. The process will become available for larger charities in accordance with this timetable.
The guidance also covers why you might want to change a charities structure, for example if your charity is unincorporated you might decide to change to a corporate charity structure (‘incorporation’) because:
- you want to register the title to your charity’s land or property in its own name (rather than in a trustee’s name or in the Official Custodian for Charities);
- you are concerned about the level of financial risk your charity faces and want to give the trustees more protection (although the trustees must still act responsibly);
- your charity will deliver charitable services under contract (for example with a local authority).
More details can be found here.
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WYCAS Shortlisted for Accountancy Award
We are very happy to learn that we have been shortlisted in the PQ Magazine Awards 2018. Our nomination is for the Innovation in Accountancy Award.
PQ Magazine Awards celebrate excellence in professional accountancy education, recognising the future generation of accountants and the hard work they put in to qualifying, as well as those who educate and support them. We will find out the result in London on 20th February 2018.
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WYCAS provides a range of specialist services designed to meet the needs of the third sector:
• One to one support and training
• Preparation of year-end accounts
• Independent examination
• Financial training courses and workshops
• Computerising accounts
• Bookkeeping and management accounts
• Advice and information
• Bespoke consultancy projects
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