The Charity Commission (for England & Wales) updated their CC15 charity reporting and accounting guidance (published 27 March 2015) last month. Jen Gerrard reviews the latest changes.
The latest update, in the form of CC15d, incorporates the Charities (Protection and Social Investment) Act 2016 provisions concerning the reporting of fundraising in the annual report – coming in to effect on 1 November 2016. These requirements are summarised later.
In the meantime, here’s an overview of some of the other changes to CC15:
- Definitions of “must” and “should” from SORP 2015 have been inserted - including emphasis around justification of reporting approach, even if not following good practice.
- Reference now made to the 2016 Order: The Charities (Protection and Social Investment) Act 2016 (Commencement No. 1 and Transitional Provision) Regulations 2016.
- SORP FRS102 – additional wording: “For financial years beginning on or after 1 January 2016 the SORP (FRS 102) is taken together with changes made to that SORP in Update Bulletin 1.”
- SORP FRSSE – additional wording: “The SORP (FRSSE) is not in effect for financial years beginning on or after 1 January 2016.”
- Removal of the link to the ICAEW Charities Online Financial Reporting Awards. These awards were given to charities who publish trustees’ annual reports and accounts online. They aimed to award best practice in financial accounting, raise the standard of web-based annual reports and encourage more charities to display their financial information online.
- Section 7 - Legal requirements for annual reports:
- Updated to refer to SORP 2015 (FRS102), clarity around the withdrawal of the FRSSE and to remove references to SORP 2005
- New and updated structure to the guidance – each individual section now contains:
- matters which all charities should report on; followed by
- additional matters to report on for charities requiring statutory audit.
- Financial review – enhanced wording and clarity around reserves policy, funds in deficit and risk management.
- Section 8 – guidance around reporting until 2008 accounting regulations are updated for FRSSE withdrawal**
** Applicable to unincorporated charities who choose to early-adopt SORP FRS102 and requires additional content in the Annual Report and Accounting Policies.
For clarity around the requirements for preparation of charity annual reports, accounts and annual returns, visit the link below relevant to a charity’s accounting period:
- Accounting periods ending on or after 1 April 2009 but before 31 March 2015, visit: Charity reporting and accounting: the essentials (CC15b).
- Accounting periods ending on or after 31 March 2015, visit: Charity reporting and accounting: the essentials March 2015 (CC15c).
- Accounting periods beginning on or after 1 November 2016, visit: Charity reporting and accounting: the essentials November 2016 (CC15d).
Charities(Protection and Social Investment) Act 2016 – new fundraising rules
Coming in to effect on 1st November 2016, the new law is aimed at strengthening fundraising practice and regulation. This was the largest area of update in the new CC15(d) guidance document mentioned above.
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These changes affect the trustees’ annual reports of larger charities which fundraise from the public and specifically, there are two new requirements:
- Where a charity, registered or unregistered, uses a professional fundraiser or commercial participator to raise funds, the compulsory written agreements between charities and these third parties must include extra information covering:
- If the scheme for regulating fundraising or recognised fundraising standards that will apply to the professional fundraiser or commercial participator in carrying out the agreement
- How the professional fundraiser or commercial participator will protect the public, including vulnerable people, from unreasonably intrusive or persistent fundraising approaches and undue pressure to donate
- How charities will monitor the professional fundraiser or commercial participator’s compliance with these requirements
- Registered charities requiring a statutory audit have to include extra information about fundraising in their trustees’ annual report. Broadly, the extra annual statements are around the charity’s:
- Approach to fundraising
- Work with, and oversight of, any commercial participators/professional fundraisers
- Fundraising conforming to recognised standards
- Monitoring of fundraising carried out on its behalf
- Fundraising complaints
- Protection of the public, including vulnerable people, from unreasonably intrusive or persistent fundraising approaches, and undue pressure to donate
Charity Commission guidance notes
CC15d follows a long line of updated guidance documents from the Charity Commission (since March 2015), giving us an interesting insight in to their focus for the coming year, as follows:
- CC3 The Essential Trustee: what you need to know – updated 10 July 2015
- CC3a Charity Trustee: What’s involved – updated 10 July 2015
- CC12 Managing a charity’s finances – new 29 January 2016
- CC14 Charities and investment matters – 1 August 2016
- CC15d Charity reporting and accounting: the essentials – updated 1 November 2016
- CC17 Accruals accounts pack – SORP FRS102 – new 9 September 2016
- CC19 Charity reserves – building resilience – 29 January 2016
- CC20 Fundraising – trustee duties – 7 June 2016
- CC35 Trustees, trading and tax – how charities may lawfully trade – 24 February 2016
- CC38 Charities and litigation – 3 August 2016
As Nigel Davies, Head of Accountancy Services for the Charity Commission, said at Mercia’s Charities Conference; “as the regulator, we are looking to you as accountants to ensure that your client has read our updated guidance and given it due regard”. Duly noted Nigel.
You can access all guidance notes here.
Have your say – SORP FRS102
If you haven’t yet contributed to the consultation on SORP FRS102, you have until 11 December 2016 to do so.
For further information visit http://www.charitysorp.org/about-the-sorp/sorp-committee/ and select invitation to comment.
Given the ASB’s commitment to a triennial review of UK GAAP, currently scheduled for 2019, we can expect to see another charities SORP update soon. Make your views count.
About Jen Gerrard
Jen is a Fellow of the Association of Chartered Certified Accountants (FCCA) and the founder and managing director of Gerrard Financial Consulting, a specialist accounting firm for the charitable sector. She has over 17 years’ experience working in accounting and finance and has also worked as an accountancy tutor for a leading training provider.
Jen has been a trustee of the Southville Community Development Association (2014 to 2017), Self Injury Self Help (SISH) (2013-2016), the Oswestry Food & Drink Festival and Impact AAS (2007 to 2010). In addition to being a current Trustee of Women’s Aid Federation of England, Jen has been a registered volunteer with Volunteer Bristol for four years and is a Member of the ICAEW Charity & Voluntary Sector Specialist Group.
Jen sits on the South West & Wales Regional Engagement Forum of the Charity Finance Group and makes regular contributions to articles in national publications – most recently AccountingWEB and Charity Finance Focus (produced by the CFG). She is also a regular speaker on charity finance and governance matters.
Her firm is a corporate member of the Charity Finance Group and was shortlisted in two categories for the AccountingWEB Practice Excellence Awards 2016. This is in recognition of the company’s innovative work with charities and NFPs to streamline their finance functions through adoption of new technology.