Community Accountants Conference

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13 Δεκ 2013 (πριν από 4 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

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


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

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

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 (

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


Tier 3


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

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


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 Financial Reporting Standard for Smaller

Based on company law framework for small

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

FRSSE Thresholds

EC proposals

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

Assets of £3.26m

Net turnover of

50 employees


small if not
exceeding 2 of the

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

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

The PBE standard

what it

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

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

but no changes predicted

August 2011

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


Proposals received mixed reception from
accountancy profession in UK

What about SORP

SORP will need to be updated

Needs to address charities using

The FRSSE; or


Need to be in place by 1 January 2014

ASB promise 18 months between
finalising new standards and their

A modular web
based SORP

download what is relevant

A modular web
based SORP

Choose framework


(choose modules)


(activity specific)


(choose modules)


(activity specific)

New time

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

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:

Download destination tables:

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


Social investment/social enterprise/mixed purpose investments


Calman Report and definition of charities and passporting

Fundraising, self regulation and collections


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