Community Accountants Conference

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13 Δεκ 2013 (πριν από 3 χρόνια και 5 μήνες)

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Community Accountants Conference



What’s changed and what’s changing…



2 February 2012


Ray Jones


Head of Accountancy Policy

What’s changed and what’s
changing…..


A new strategic plan for Commission


A new accounting framework for the UK


A new approach to investments


A new (but same) Charities Act


Feedback from Consultation


Given resource pressures the Commission needs to
focus on core duties, including:


registration of charities


providing guidance


statutory advice or permissions


ensuring transparency through annual returns


investigation of alleged wrongdoing




Strategic Plan 2012
-

15

Two key areas of priority for the next four years:


Developing accountability and compliance of
sector; and


Developing self
-
reliance of the sector



Developing accountability




Rigorous approach to granting charitable
status


Holding charities to account (review of
information we require of charities)


Promote need for charities to file on time

Online filing…


Over 90 per cent of charities file Annual Return
on line


But only around 60 per cent file accounts on line


Why is this?


Absence of a "trusted intermediaries" log on for
accountants ?


Unsure about how to convert to PDF (there are
lot's of free packages on the web) ?


We advise customers to go onto Google and
type in “pdf converter”



Developing compliance




Timely action


Decisive interventions


More proactive


More co
-
ordinated


New Risk Framework


The risk assessment :



Does the Commission need to engage?


If it does, what is the nature and level of risk?


If it does, what is the most effective response?




New Risk Framework



Single point of contact:


First Contact (enquiries@charitycommission.gov.uk)



First stage filter:


Is it for the Commission?


Is it straightforward or requires web guidance?


refer to specialist teams



Concerns about non
-
compliance passed to:


Operations Units, or in the most serious cases to:


Investigations and Enforcement

What the Commission will not
do in future …

We will not :


give advice to individual charities if the guidance is on
our website


get involved where a member of the public disagrees
with decisions made lawfully by the charity’s trustees


engage in internal or external disputes that are the
responsibility of trustees to resolve


engage in issues that do not pose a serious risk to a
charity’s status, assets, services or beneficiaries


deal with incidents of poor service from a charity were
there is no general risk to its services, its beneficiaries
or its resources


get involved in issues that are the responsibility of
another statutory or supervisory body

Future of UK GAAP

Remember the tiers




Tier 1
-

EU adopted IFRS


Tier 2
-

The FRSME


Tier 3
-

The FRSSE


Plus a PBE Standard…


A new accounting framework?


Accounting periods commencing 1January 2015


Tier 1
-

No extension of EU
-

adopted IFRS beyond that
currently required by law


Tier 2


The proposed Financial Reporting Standards
for Medium
-
sized Entities (the FRSME)


Tier 3
-

The Financial Reporting Standards for Smaller
Entities (The FRSSE)


Public Benefit Entity Standard (The PBE Standard)


will be incorporated into FRSME


Receipts and Payments


not subject to accounting
standards


Full EU

adopted IFRS



ASB to remove definition of ‘public
accountability’ from framework


No extension of EU
-
adopted IFRS (Tier 1)
beyond current requirements in law


Only companies (other than charities) with
securities admitted to trading on a regulated
EEA must apply EU
-
adopted IFRS


No charity will be forced into Tier 1 reporting


Tier 2


the FRSME


Based on IFRS for SMEs


initially plan was for minimal
change … but significant changes now expected


The FRSME to be reissued for consultation in early 2012


Amendments likely to allow accounting options provided
in UK GAAP ( e.g.. Revaluation and capitalisation of
interest on developments)


Amendments to facilitate Company Law formats


Additional disclosure of Financial Instruments applying
to Financial Institutions


The PBE Standard be incorporated into the ‘FRSME’


setting out ‘what’s different’ for PBEs

Tier 3
-

the FRSSE



The Financial Reporting Standard for Smaller
Entities


Based on company law framework for small
companies


EC proposals to amend Accounting Directives


Increased thresholds for small companies


Simpler notes for small companies


ASB indicate that FRSSE will be retained but
revised in line with new directives


ASB propose consultation on FRSSE later in
2012



FRSSE Thresholds


EC proposals



Currently an entity is
small if not exceeding
2 of the following:


Assets of £3.26m


Net turnover of
£6.5m


50 employees





Proposal
-

small if not
exceeding 2 of the
following:


Assets of EUR 5 m
(approx. £ 4.417 m)


Net turnover of
EUR 10 (approx
£8.834 m)



50 employees


What about the PBE Standard ?


The Public Benefit
Entity Standard


Recognition by ASB
that commercial
standards did not
address key PBE
issues


ASB now propose to
address PBE issues
by supplementary
paragraphs within the
FRSME

The PBE standard


what it
covered


Concessionary loans


Property held for social benefit


Entity combinations


Impairment of assets


Funding commitments


Income from non
-
exchange transactions


Heritage assets taken into FRSME

Receipts and payments
accounts


Unaffected by accounting standards


Only applicable if charity is not a company


But will be an option for CIO when available


Charities Act review might look at thresholds
(income of £250,000 or less) and need for format
rules


but no changes predicted


August 2011


BIS consultation on accounting
for Micro Entities ( EC proposals to exempt from
4
th

Directive)


Proposals received mixed reception from
accountancy profession in UK


What about SORP


SORP will need to be updated


Needs to address charities using
either:


The FRSSE; or


The FRSME


Need to be in place by 1 January 2014


ASB promise 18 months between
finalising new standards and their
application


A modular web
-
based SORP


download what is relevant


A modular web
-
based SORP


Choose framework

FRSSE

(choose modules)

Modules

(activity specific)

FRSME

(choose modules)

Modules

(activity specific)

New time
-
line


ASB re
-
consult on framework and FRSME in early 2012


ASB consult on FRSSE in 2012


New EC rules for micro entities and small companies?


New SORP and accounting regulations ideally needed by
1 January 2014


Implementation of new framework for accounting
periods commencing on or after 1 January 2015


Charities and investment


In 2010


registered charities
held £78bn as investments


Traditionally investment held to
provide income that supports
charitable purposes


But charities increasingly
interested in moving beyond
conventional investments and
looking to invest in further aims
more directly

Motives may differ…


Financial investments


Programme related investments


Mixed motive investments

Financial investment



An asset held to provide the best financial
return (income or gain) within the level of risk
considered to be acceptable


Trustees can invest in any asset that is
intended to produce income and/or gain
subject to investment powers


Need to meet trustees’ investment duties


Need to be aware of tax rules

Trustees’ duties when investing…


A duty of care


Consider how suitable any investment is for their
charity


Consider the need to diversify investments


Take advice from someone experienced in investment
matters where they consider they need it; and


Review investments (and their investment manager)
from time to time, changing them if necessary.



These legal requirements do not apply to trustees of
charitable companies. However, they should adopt
these principles as good practice when making
investment decisions.

An ethical stance to investment

The law permits an ethical approach if:


a particular investment conflicts with the aims
of the charity; or


the charity might lose supporters or
beneficiaries if it does not invest ethically; or


there is no significant financial detriment.

Programme related investment


A programme related investment is
investment made by a charity specifically to
further its aims for the public benefit.


This means that the rules on financial
investment, for example in the Trustee Act
2000, do not apply. However, while PRI is
bound by different rules, it can still be
considered as a form of investment.

Mixed motive…a new category?


Some charities seeking both a financial and
charitable return find they are unable to
justify making the investment solely on the
basis of it either furthering the charity's aims
or as a financial investment.


We consider that the law permits, where it can
be justified in advance of the investment
decision, a mixed purpose investment.

Best interest of the charity…

Core question


can trustees demonstrate they

are acting in best interests of their charity by

either investing for:


Best financial return (financial investment)


Furthering the charity’s aims (programme
related investment)


Or doing both (mixed motive investment)

Charities Act 2011


The Charities Act 2011 consolidates previous
charity legislation into a single Act.


The implementation date is 14 March 2012.




Refer to the provision of the Charities Act
2011 on documents executed on or after 14
March 2012


Refer to the provisions of the Charities Act
1993 (or other relevant legislation) in
documents executed before 14 March 2012


Charities Act 2011


Download 2011 Act:


www.legislation.gov.uk/ukpga/2011/25/enacted


Download destination tables:


www.legislation.gov.uk/ukpga/2011/25/resources


New references for
independent examination



Independent examiners following the 2011 Act
would state that:


Their examination of the accounts was under
section 145 of the Act.


They follow the Directions made under section 145
(5) (b) of the Act.


The charity keeps accounting records under
section 130 of the Act.


The accounts comply with the requirements of the
2011 Act.


Review of Charities Act


Lord Hodgson of Astley Abbotts to report to
Parliament by 17 July 2012?


Lord Hodgson will issue a call for evidence from
charities and others



Possible issues:


Commission’s funding


Tribunal


Social investment/social enterprise/mixed purpose investments


Volunteering


Calman Report and definition of charities and passporting


Fundraising, self regulation and collections


Thresholds




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-
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