My client is a charitable company limited by guarantee, based in Northern Ireland. We are engaged as auditors and are currently working on year ended 31 Dec 2016. The company is transitioning from Charities SORP FRSSE to Charities SORP (FRS 102). Upon reading Update Bulletin 1, I want to make sure I am reading the guidance correctly and not missing anything relevant.
Firstly, the guidance notes that investment properties (which are the major element of the charity's assets) must be stated at fair value at reporting date. Am I right in thinking this applies to 31/12/15 and 31/12/16 under the new accounting framework? So if no revaluation was done at 31/12/15 then these accounts must shown the revaluation of the investment properties at each year-end date? With appropriate disclosures of the adjustment to the 2015 figures?
Secondly, the client may not wish to incur the cost of external valuation and I can see certain exemptions on this within the guidance including the disclosure requirments. One of the directors has been involved in property and construction for over 20 years and would have reasonable local knowledge of the property market. Can we rely on this fair value estimate? (I know it's really our call but just looking for thoughts on this).
Thirdly, the guidance indicates that revaluation must be included in the SOFA and, from a pro forma set of accounts I've looked at, the revaluation is shown after "Tranfers Between Funds" under a section called "Other recognised gains / (losses)". But which fund does the revaluation be attributed to - restricted/unrestricted?
Many thanks in advance for any help given.