VISALorem ipsum dolor sit amet5656 343 787 888

£

PROTECTION

CharityMatters

January 2017

Chartered Accountants

Featured Articles

CharityMatters

Charity Commission: Updated GuidanceCharity FraudNew Annual Return systemCan we pay our Charity Trustees?

What do Charities have to do for GDPR?Protecting a Charity’s income Independant Examinations: What has changed?New Governance for Charities

Spring 2018

CHARITY MATTERS

Charity Commission: Updated Guidance

1

The Charity Commission continues to issue new and updated guidance covering a broad range of topics.

New and updated guidance, available on the Charity Commission website (www.charity-commission.gov.uk), includes:

CC15d: Charity reporting and accounting: the essentials (November 2016) – This document supercedes previous versions, updated for changes in thresholds and legislation. The guidance explains how to prepare a Charity’s annual report and accounts, as well as specific reporting requirements for different types of Charity and the external scrutiny requirements for charities.

CC25: Charity finances: Trustee essentials (March 2017) - This document has been updated for changes in thresholds and legislation. It is intended to ensure that Trustees comply with their duties around financial management.

CC32: Independent examination of Charity accounts: directions and guidance for examiners (September 2017) – This guidance is explained in further detail on page 5.

CC16: Receipts and payment accounts pack - This document has been updated to include welsh versions.

Amendments to the SORP - The Charity Commission are proposing the following changes to the SORP;The introduction of an accounting policy choice for entities that rent investment property to another group entity;The clarification of the accounting treatment for payments by subsidiaries to their charitable parents that qualify for gift aid;The clarification of the requirements for comparatives for disclosure required by the SORP;The introduction of a requirement for a net debt reconciliation to be prepared as a note to the statement of cash flows.

They are also inviting comments with regards to the following questions:1. Do you agree with how the amendments to FRS102 have been reflected in the proposed amendments to the Charity SORP (FRS102)? If not, which of the proposed changes do you not agree with and why?2. Are there any other amendments to the Charities SORP (FRS102) that you consider to be necessary based on the recent amendments to FRS102?

Charity FraudFraud still seems to be a big problem for charitiesRecently a hospice in Manchester was the victim of an ‘elaborate hoax’, involving fraudsters purporting to be from a bank conducting an online virus check, which is currently being investigated by police. The fraud amounted to £240,000.

Trustees and employees need to ensure that they are being vigilant and internal control systems are being implemented correctly.

Whilst this is an example of external fraud, fraud can also be internal. Common types of internal fraud include the misuse of Charity money, false expenses and bogus employees on the payroll.

The Charity Finance Group recommends that charities sign up to their counter fraud pledge, allowing them to display a badge on their website showing that the Charity is committed to protecting its assets. The counter fraud pledge focuses on six promises;

1. Consult on the types of fraud the Charity could be at risk of2. Create a Fraud Policy3. Ensure all Trustees are aware of and understand their legal duties4. Appoint a key person to be responsible for fraud5. Share the fraud policy with staff, volunteers and Trustees6. Assess annually how well the fraud policy is working

Visit: www.cfg.org.uk/policy/counter-fraud-campaign

For more information and details regarding ‘the pledge’.contact our Charities team by emailing charities@wrllp.co.uk

COMMITTED TO YOUR SUCCESS

£

£

Tax Calculators

6

Team NewsWedding bells for Sarah Malpass (Nee Nicholl)Congratulations to Sarah who surprised us all by getting married whilst on holiday in Ohio, America earlier this year! Sarah and Mark had a perfect day and we wish them all the very best for the future.

New email addresses - Please update your address booksFrom 1st October 2017, the domain name for all Whittingham Riddell email addresses was changed from @whittinghamriddell.co.uk to @wrllp.co.uk. The address before the domain name remains the same.

Any emails sent to a @whittinghamriddell.co.uk email address will be automatically forwarded to the new @wrllp.co.uk for a short transition period, but we ask that you please update your address book as soon as convenient, to ensure no messages are missed.

WR launch new AppAs a firm we are constantly looking for ways we can improve the service we offer our clients and we are proud to announce the launch of our free new WR app.

Use the camera on your phone to capture invoices and payments, receipts and expenses at the touch of a button.

With minimal effort you can take a picture of any receipt and save it to your App or submit the data to your cloud accounting provider.

The next time you need to look up a tax rate or work out a VAT calculation, our new App can help.

It provides you with up to date, important tax data at your fingertips.

We’ve included your favourite business systems, invaluable tools and features:

Calculators Key tax dates calendar Tax tables Financial news Links to HMRC

When it comes to mileage tracking, half the battle is keeping an accurate tab on your trips.

Using your phones built-in GPS the app tracks your mileage, helping you record every trip.

You can view, edit or email journeys with complete ease.

Receipt & Income Management

Other features

Mileage Tracker

CHARITY MATTERS

In July 2017, a new version of the Charity Governance Code was issued, setting out higher standards of governance for charities and urging larger charities to carry out external governance reviews every three years. The Code was overseen by a steering group of Charity umbrella bodies, following a consultation and was issued in two versions, one for smaller charities and one for larger charities.

The Code is based around seven principles, which build on the foundation assumption that a Charity is meeting its legal and regulatory responsibilities. The principles are:

1. Organisational purpose2. Leadership3. Integrity4. Decision-making, risk and control5. Board effectiveness6. Diversity7. Openness and accountability

Each principle is explained, together with the key outcomes and recommended practice for each specific area. Boards are encouraged to review these and then “apply or explain” – apply the recommended practice or explain what they have done instead or why they have not applied it.

The codes can be accessed at www.charitygovernancecode.org

5

Charity law requires all charities with gross annual income of more than £25,000 to have some form of external scrutiny of their financial statements each year, an Independent Examination or an Audit. Predominantly applied to smaller charities, an Independent Examination is a less thorough form of scrutiny than an Audit. It provides less assurance in terms of the depth of work undertaken and is limited as to the matters on which the Examiner can report.

An Independent Examination involves a review of the accounting records maintained by a Charity and a comparison of the year-end financial statements with those records. It also involves a review of the financial statements and the consideration of any unusual items or unexplained variances. The Examiner also has to consider whether any matters have come to their attention as a result of the examination which should be included within their report to enable a proper understanding of the financial statements is reached.

The guidance around conducting an Independent Examination has been re-issued following a Charity Commission consultation and now includes three additional Directions which Examiners need to follow:

Check for any conflicts of interest that prevents the Examiner from carrying out their Independent Examination; If the accounts are prepared on an accruals basis and one or more related party transaction took place the Examiner

must check if these were properly disclosed in the notes to the accounts; The Examiner must check whether the Trustees have considered the financial circumstances of the Charity at the end

of the reporting period and, if the accounts are prepared on an accruals basis, check whether the Trustees have made an assessment of the Charity’s position as a going concern when approving the accounts

Trustees therefore need to ensure that they are aware of their responsibilities around the three new areas, particularly around identifying related party transactions and considering how they assess the Charity’s position as a going concern.

We will be issuing detailed guidance on these areas to our clients in due course.

Independent ExaminationWhat has changed?

New Governance Code for CharitiesShould Charities Embrace it?

COMMITTED TO YOUR SUCCESS2

New Annual Return system Financial years ending on or after 1 January 2017 can now submit their Charity Commission annual return online.

Whilst no significant changes have been made to this year’s annual return, the Charity Commission did launch a new consultation on the Annual Return for 2018 – So watch this space!

The Charity Commission released the summary below showing what needs to be submitted by organisation type:

For accounts with incomes below £25,000 you don’t need to go through external scrutiny unless stated as a requirement in your governing document.

Un-incorporated organisation

Your annual return online, PDF copy of accounts and trustees’ annual report (external scrutiny required)

Over £1 million or gross assets over £3.26 million and gross income over £250,000

£250,001 to £1 million and total assets below £3.26 million

£25,001 to £250,000

£10,001 to £25,000

£0 to £10,000

Your annual return online, PDF copy of accounts and trustees’ annual report (with external scrutiny and full audit)

Your annual return online, PDF copy of accounts and trustees’ annual report (external scrutiny required)

Your annual return online and trustees’ annual report

Update charity details online through the annual return service and trustees’ annual report

Charitable company

Your annual return online, PDF copy of accounts and directors’ report with a simplified trustees’ annual report (external scrutiny required)

Over £1 million or gross assets over £3.26 million and gross income over £250,000

£250,001 to £1 million & total assets below £3.26 million

£25,001 to £250,000

£10,001 to £25,000

£0 to £10,000

Your annual return online, PDF copy of accounts and directors’ report with a simplified trustees’ annual report (with external scrutiny and full audit)

Your annual return online, PDF copy of accounts and directors’ report with a simplified trustees’ annual report (external scrutiny required)

Your annual return online. Also upload your directors’ report with a simplified trustees’ annual report

Update charity details online through the annual return service. Also upload your directors’ report with a simplified trustees’ annual report

Your annual return online, PDF copy of accounts and trustees’ annual report (external scrutiny required)

Over £1 million or gross assets over £3.26 million and gross income over £250,000

£250,001 to £1 million and total assets below £3.26 million

£25,001 to £250,000

£10,001 to £25,000

£0 to £10,000

Your annual return online, PDF copy of accounts and trustees’ annual report (with external scrutiny & full audit)

Your annual return online, PDF copy of accounts and trustees’ annual report (external scrutiny required)

Your annual return online, PDF copy of accounts and trustees’ annual report

Your annual return online, PDF copy of accounts and trustees’ annual report

Charitable incorporated organisation (CIO)

CHARITY MATTERS3

Can we pay our Charity Trustees?Trustees are essential to the successful running of a Charity, volunteering both their time and expertise. Therefore, it may be considered only fair that Trustees should be reimbursed for any out-of-pocket expenses incurred whilst carrying out their duties. These should be documented in a written agreement, along with details of how claims can be made and the approval process.

Expenses included within the agreement could include: Travel to and from Trustee meetings Overnight accommodation Postage, telephone calls and broadband time for Charity work Childcare while attending meetings

Whilst the majority of Trustees volunteer their time and expertise, some charities do pay Trustees to be a Trustee. However, they can only do this because it is expressly permitted within their governing document, by the Charity Commission or by the courts. Permission can be obtained from the Charity Commission at http://forms.charitycommission.gov.uk/trustee-payments

Trustees who provide specialist services, premises, facilities, administration or secretarial work could be paid for these services, but first a written agreement between the Charity and the Trustee must be drawn up. It is important that the Trustees follow their duty of care ensuring that the payment is in the best interests of the Charity and that all discussions are recorded in the minutes. This is assuming that the payment of Trustees is not prohibited by the charities governing document.

When drawing up a written agreement ensure that the individual benefiting from the agreement isn’t involved in the boards decision. The agreement should include the exact or maximum amount to be paid and the nature of the payments.Charities should also take care with payments to ‘related parties.’ These include a spouse or partner, sibling, a brother or sister-in-law, parents or business partner. Any payments should be properly approved by the board, represent best value for money and be fully disclosed in the accounts.

Further information can be obtained from the Charity Commission guidance CC11: Trustee expenses and payments.

What do charities have to do for GDPR?GDPR guidance for CharitiesA recent survey found that only 44% of charities have heard of GDPR and whilst it is of particular importance to fundraising charities it is likely to affect all organisations.

In the UK, the GDPR will be overseen by the Information Commissioner’s Office (ICO). They are an independent public body set up to uphold information rights in the public interest. The ICO sit independently of government, though are sponsored by theDepartment for Digital, Culture, Media and Sport (DCMS).

In terms of data protection, the rules are the same for charities as they are for any other organisation. Under the GDPR, the ICO will be given more powers to defend consumer interests and issue higher fines. In case of the most serious data breaches, this could be of up to 20 million or 4% of annual global turnover (whichever is higher), aligned to the financial sanctions set out within the GDPR.

The ICO also provides a right for individuals to claim compensation in relation to data breaches if they cause damage or distress. Furthermore, the ICO can take action, such as, performing a data protection audit, taking enforcement action, and levy a fine for serious incidents. Recently they have been particularly focussed on the use of data for purposes other than that for which it was collected: a number of prominent charities have had action taken over their fundraising activities under this focus.

The important thing to remember is that you should be only using data for the purposes that you told the data subject when you collected it, and for which they gave their consent. However, you might not need to ask the data subject for consent if there is another valid reason for processing the data – perhaps to fulfil a contractual arrangement, or in support of our legitimate interests.

Useful guides include: UK200 guide on GDPR - http://bit.ly/2oIp6XdICO: 12 Steps to take now - http://bit.ly/2deJ72TThe Charity Financial group - http://bit.ly/2FqRa7u

COMMITTED TO YOUR SUCCESS4

Know your key renewal dates/notice periods for your utility and telecommunications costs. Keep a record of all sites, all meters and supplies and act on them to prevent rollover or periods on deemed or out of contract rates.

Do not assume when moving a utility supply that it has transferred. Always contact the new supplier to ensure they have taken it over, thus avoiding a period on out-of-contract (OOC) rates. Check if any money needs to be returned from the old supplier. Similarly, when taking on new properties suppliers can be slow in processing changes of tenancy. Do not accept them putting you on deemed rates for the period it takes them to process always ask for a price to be back dated to when you moved in. If you decide to move supplier when you take on a new property remember you will be charged deemed rates until the change of tenancy is processed, for some suppliers this can take 6 to 8 weeks.

Have a member of staff monitor energy usage at all sites and look for anomalies particularly if you have shops. It is not impossible that you are paying for a third party’s utilities! Try and have staff report monthly meter readings to suppliers. This can normally be done on line. This will make for accurate billing and not high estimated bills.

Encourage your staff not to agree utility contracts on the phone. If a call is received the instruction should always be that offers need to be received in writing before anything can be accepted. This should allow for any hidden charges and onerous contract clauses to be identified.

Understand how your staff use telecommunications and other business services. An accurate usage profile allows you to buy the best fit, not just the best headline price.

Check the adequacy of your business insurance cover. Re-tender it regularly.

Control the purchasing of business stationery and other consumables and services. Understand your buying habits and purchase accordingly. Avoid shopping around as this increases your costs ultimately. Always consider the total cost of the purchase not the price you paid for the item.

Check water bills for their accuracy. If your water bill at a shop shows an average higher than 250 litres a day then you may have a problem that requires investigating. Also compare usage between shops to see if any obvious anomalies exist. Know your obligations for the correct disposal of waste. Be aware that many of these services can be tendered. Is the service being provided by the current supplier right for you i.e. number and size of bins?

Merchant cards: many Charity shops take card payments, but is it profitable in all shops for the revenue taken? Are you confident you have the measures in place to stop fraudulent transactions? Understand the compliance issues around merchant cards. Again, benchmark different shops to see which are trading profitability on merchant services. Do not take card machines on long term rentals. If revenue through machines increases talk to your supplier about improved rates. Ask for a review of your merchant rates annually with your supplier Where possible avoid taking card payments over the phone as these will be charged at a premium, as they carry a higher risk of fraud.

Do not automatically place business with current suppliers. Tender to alternative suppliers when your contracts are due for renewal. Always check that your supplier, no matter how good, is still offering you competitive pricing and the best service levels.

Delivery costs: do you take these into consideration when ordering from suppliers? Remember to ask the question when tendering otherwise these can be a substantial additional cost.

Protecting a Charity’s Income12 things to consider

12

3

4

5

67

8

9

10

11

12

For more information visit their website:www.auditel.co.uk

Chartered AccountantsChartered Accountants

Copyright of Whittingham Riddell LLP. Copyright © 2017 The contents of all articles featured in this newsletter are for information only and should not be relied upon as a substitute for appropriate legal, accounting or other appropriate professional advice.

OfficesShrewsburyLudlow Newtown Wrexham

3-4 The Business Quarter Eco Park RoadLudlow, SY8 1FD

T: 01584 872952

Hafren House 5 St. Giles Business ParkNewtown, Powys SY16 3AJ

T: 01686 626230

Belmont House Shrewsbury Business ParkShrewsbury, Shropshire SY2 6LG

T: 01743 273273

1 Edison CourtWrexham Technology Park Wrexham, LL13 7YT

T: 01978 261579

@wraccountants

Whittingham Riddell LLP

Whittingham Riddell

Connect with us

www.whittinghamriddell.co.uk/sectors/charities

Online resources Have you seen our Charity guides and

documents online?

Charity Specialists

Our firm has a long established reputation for expertise in providing accounts and tax advice and support to the charity and not-for-profit sector.

We have specialist staff and a dedicated team who work in the charities, education and not-for-profit sector.

Our extensive portfolio has enabled us to develop an in-depth knowledge of the accounting and broader issues consistent with the specialist sector.

In addition to our annual update seminar and the publication of newsletters and e-bulletins, we deliver bespoke workshops and courses to suit the specific requirements of clients.

Our client base covers a wide range of organisations including, Education, Advocacy, Arts & Cultural, Care & Rehabilitation, Community Support & Recreation, and Wildlife.

E-BulletinSign up today!

Did you know that our Charities Team issue regular e-bulletins to update you on sector specific developments on a timely basis?

If you do not currently receive our E-bulletins and would like to, please contact Katharine Griffiths on 01743 273273 or at charities@wrllp.co.uk

Andy Malpass, ShrewsburyE: amalpass@wrllp.co.uk

Anjali Jaijee, ShrewsburyE: ajaijee@wrllp.co.uk

Jane Tweedie, Wrexham & NewtownE: jtweedie@wrllp.co.uk

Cathrin Roberts, NewtownE: cr@wrllp.co.uk

Contributions to the newsletter The newsletter has been compiled by Andy Malpass, Clair Moelwyn-Williams and Sarah Malpass, members of the Whittingham Riddell Charities Team and Adrian Burton from Auditel.

For more information…If you have questions about any of the topics covered, please call a member of our specialist charities team:

John Fletcher, NewtownE: jf@wrllp.co.uk

Bethan Thomas, ShrewsburyE: bthomas@wrllp.co.uk

Dean Jarman, ShrewsburyE: dj@wrllp.co.uk

Sarah Malpass, Shrewsbury & WrexhamE: sn@wrllp.co.uk

£