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Charity wants to split a legacy over 2 years

Legacy confirmed for this year can they split the income into next year

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Working with small charity which is due to receive a significant legacy during this year and their bookkeeper wants to put sufficient into ths year to plug the charity's deficit and the rest into next year. I'm not really sure why and understand that the legacy should be recognised in full when formal notice of it has been received. They're asking me for a yes or no and I'm not sure but am erring towards NO you can't do that. Thanks.   

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ALISK
By atleastisoundknowledgable...
04th Dec 2019 22:51

I vote no.

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By Accountant A
05th Dec 2019 00:44

Whilst it's easy to agree with your conclusion, absent a proper understanding of the bookkeeper's rationale (if any), I don't think you can properly opine.

Maybe the terms of the legacy have some bearing??

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By kiwilondon99
05th Dec 2019 08:31

ALSO are the funds resticted or general funds...

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By WhichTyler
05th Dec 2019 08:56

Sorp para 5.8 is the guide
( http://www.charitysorp.org/media/619101/frs102_complete.pdf )

And on the face of it, it's a no from me too

But: if realising the legacy involves selling property, you might want to take a cautious view on the valuation in these uncertain times...

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RLI
By lionofludesch
05th Dec 2019 09:49

I vote no.

I also vote sack the bookkeeper because he - or she - has an insufficient understanding of charity accounting.

Seriously, I've never heard such blocks.*

*OK, well maybe I have, but not often.

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Replying to lionofludesch:
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By WhichTyler
05th Dec 2019 12:46

Harsh! Perhaps they are just trying to be helpful and have a misguided notion that showing a 'surplus' will make it harder to raise money in future.

so an opportunity for training, rather than dismissal, especially a this time of goodwill to all (including book keepers)...

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Replying to WhichTyler:
RLI
By lionofludesch
05th Dec 2019 15:27

WhichTyler wrote:

Harsh! Perhaps they are just trying to be helpful and have a misguided notion that showing a 'surplus' will make it harder to raise money in future.

so an opportunity for training, rather than dismissal, especially a this time of goodwill to all (including book keepers)...

Not sure that justifies false accounting.

Yeah - training - sure. All trustees and officers should undergo it. Hard to enforce as the assorted charity commissions want folk to perform public benefit tasks.

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By the_drookit_dug
05th Dec 2019 10:09

If it's unrestricted, they can set up a designated fund if they want to show the amount that has been ringfenced for next year separately.

That is, of course, if that's what the trustees want. If it's just the bookkeeper talking mince, then overrule.

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By johnt27
05th Dec 2019 10:50

It's definitely a no.

I suspect the bookkeeper may be wanting to split the legacy so as to avoid breaching income levels on scrutiny - audit, IE etc (assuming this is a reasonably sized legacy)

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Replying to johnt27:
RLI
By lionofludesch
05th Dec 2019 11:00

johnt27 wrote:

I suspect the bookkeeper may be wanting to split the legacy so as to avoid breaching income levels on scrutiny - audit, IE etc (assuming this is a reasonably sized legacy)

If that's the reason, it definitely needs to be brought to the attention of the Trustees, if not the CCEW (or its Scottish or Nornirish equivalent).

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By colinloc
05th Dec 2019 16:48

Thanks for your responses - very helpful. Just to clarify I understand that the legacy complies with the 3 conditions set out in SORP 5.8 above and s unrestricted. So far as scrutiny is concerned I think they will still be within Independent Examination but by a 'qualified person'.

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Replying to colinloc:
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By Mike Bath
06th Dec 2019 15:17

If all three boxes of SORP 5.8 are ticked, I can't immediately think of a valid reason not to recognise the entire (estimated if needs be) amount in full in year 1.

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By JDBENJAMIN
05th Dec 2019 22:29

Things happen when they happen, not when it is convenient for people who want to fiddle their accounts. The legacy was a single event, so should be treated as arising on one date. So tough titty for the charity if they want to pretend otherwise.

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