The attached case may be of interest to members: it concerns seven charities in which there were serious discrepancies in income and expenditure reported; the recording of a single trustee under two names, and several trustees who were unaware that they had been listed as trustees.
The government aims to review the financial thresholds set out in the Charities Act 2011 next year, which could lessen the reporting burden for some charities. Baroness Barran, minister for civil society, made the announcement during the second reading debate on the Charities Bill in the House of Lords last week. - See more.
Charity accounting rules should be simplified, according to a joint statement by the sector’s regulators.
The Charity Commission for England and Wales, along with its counterparts in Scotland and Northern Ireland, has called on the Financial Reporting Council (FRC) to “declutter” the statement of recommended practice (SORP), which provides the framework for charity accounting.
In a letter to the FRC, the regulators said the SORP was too closely aligned with the requirements of private companies rather than charities, and that they were likely to request further “wholesale changes” to accounting rules in the future.
Mark Salway explains how some charities have become unexpectedly 'cash rich' during the Covid crisis, thanks to furloughs, and the closing down of activity, and the risks behind this.
The reforms to Gift Aid on cancelled events have been made permanent:
If a charity event is cancelled, HMRC will accept that where a person due a refund decides to donate this to a charity, the requirements of S416 ITA07 are met provided:
The charity no longer has to physically refund the ticket price for the individual to re-donate.
The guidance to the procedure is here.
The Charities Bill, announced in the Queen’s Speech on 11 May 2021, proposes several technical, but important, changes to charity law.
The Charity Commission has been working closely with charities and their representative bodies, the Department for Digital, Culture, Media & Sport (DCMS), and the Law Commission, to bring these changes forward. This follows extensive consultation over several years.
Charities are less financially resilient than they were a year ago, the Charity Commission’s chief executive told MPs yesterday. Helen Stephenson, chief executive of the Commission, was giving evidence to the Public Accounts Committee about the impact of Covid on the sector. - See more.
In particular, the guidance on claiming Gift Aid on waived refunds and loan repayments has been updated. Read More
Financial sanctions are probably not the first thing that comes to mind when you think about the work and operations of international charitable work. Like everyone else, charities and their trustees must not only understand financial sanctions, but comply with them.
Charities working in an international context may face particular risks due to their operating environment but we also know that it is often in these areas where there is the greatest humanitarian need. That is why we, at the Charity Commission of England and Wales (CCEW), work closely with OFSI to help charity trustees understand and comply with financial sanctions, so they can continue to deliver their important work.
Mark Salway argues that charities should move away from the model of three to six months operational reserves and instead consider unrestricted reserves in terms of the following purposes:
Downturn in income--how much and for how long?
Increase in expenditure--what is the variance you might expect?
To invest for the future--in developing a new project, service or to buy an asset.
To meet one-off costs--where a known liability needs to be met, or for disallowed costs.
For cash flow.
A good reserves policy simply looks down each line and each risk, and sees what level of reserves is needed against each.
Subscribers to Charity Finance can read the full article here.
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