Finance | Understanding Basics

Messrs G Owen & Co

Finance | Understanding Basics - Presentation

Messrs G Owen & Co

UNDERSTANDING FINANCE

WELCOME to Messrs G Owen & Co and Opening Plenary.

UNDERSTANDING FINANCE BASIC PRESENTATION

TRAINER:

VOLUNTARY SECTOR & FUNDRAISING CONSULTANT

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Emergency Evacuation Information

Please familiarise yourself with the Fire Notices, (which includes external location(s) to vacate to), in the case of an emergency + fire hydrant signs so as to be aware of which extinguishers exists, e.g. Red = Flammable Liquids

Green = Ordinary Combustibles

Black = Electrical

Blue = Electrical/Chemical.

In the event of an emergency evacuation: If the fire alarm is a continuous ringing bell or siren please leave the building in a calm orderly fashion.

We all will direct go to the nearest exit and outside of the building and locate ourselves well clear of the building to a point of safety and not in the road.

Whether a real emergency, or a false alarm please do not decide to simply leave and go back to work or home. Please remain at this location until otherwise advised. The reason for this is simply so that a body count can be made to ensure that everyone has left the building, otherwise uncertainly will likely need for the emergency services to have to assume that someone might still be in the building, deploying and risks personnel searching for people who have since left. Under no circumstances should anyone re-enter buildings until the all-clear has been given by authorised personnel or a Senior Fire Brigade Officer.

Please note and observe that there is a No Smoking policy in most buildings.

Amenities Refreshments

Amenities

WC locations

Refreshments

Tea, Coffee, Biscuits, Mineral Water, and Fruit Juices will be available during break periods.

Where a full-day Presentation Training Workshop is held, lunch will also be included and provided. Special Diet, Vegetarian, or Vegan requirements may be provided subject to advance notification with details.

Event Activity Worksheet 1

This Worksheet can be used to plan and track event budgets. Enter values in the white boxes. Excel

will calculate the results in the yellow boxes.

This worksheet is locked to preserve the formulas that calculate your results. To unlock the Worksheet, contact Messrs G Owen & Co

Event Activity Worksheet 2

Income & Expenditure Statement

Income & Expenditure Account 1

Income & Expenditure Account 2

Income & Expenditure Account 3

Appeal Cover Sheet

Appeal Shopping List 1

Statement of Affairs Expenditure

Appeal Shopping List 2

Statement of Affairs
Income
Summary
Declaration

Restricted Funds

Restricted funds are funds subject to specific trusts, which may be declared by the donor(s) or with their authority (e.g. in a public appeal) or created through legal process, but still within the wider objects of the charity. Restricted funds may be restricted income funds, which are expendable at the discretion of the trustees in furtherance of some particular aspect(s) of the objects of the charity. Or they may be capital (i.e. endowment) funds, where the assets are required to be invested, or retained for actual use, rather than expended.

Unrestricted Funds

Unrestricted funds are expendable at the discretion of the Trustees in furtherance of the charity's objects. If part of an unrestricted fund is earmarked for a particular project it may be designated as a separate fund, but the designation has an administrative purpose only, and does not legally restrict the Trustees discretion to apply the fund.

Some Trustees have power to declare specific trusts over unrestricted funds. If such a power is available and is exercised, the assets affected will form a restricted fund, and the Trustees' discretion to apply the fund will be legally restricted.

Designated Funds

Designation is an administrative act by which Trustees may earmark unrestricted funds for a particular project or use, without restricting or committing the funds legally. The designation may be cancelled by the Trustees if they later decide that the charity should not proceed or continue with the use or project for which the funds were designated.

The act of designating particular funds neither:

Allows those funds to be used for a purpose for which they could not previously be used; nor by itself provides a justification of their use for the designated purpose.

SORP 2000 states that if the Trustees set up a designated fund the notes to accounts should explain why trustees have set up such a fund. It further states that a brief description should be given of the different types of fund held by the charity, including the policy for any transfer between funds and allocations to or from designated funds.

The Charity Commission expect charities to follow this recommendation and to ensure that the amount of any funds held as designated funds is appropriate to the purpose or use for which the funds have been designated.

A charity will not be justified in creating, or transferring resources to, a designated fund where the main purpose of doing that is to allow the charity to show a reduced level of reserves.

Charity Commission SORP 1

Question: What does SORP mean?

Answer: SORP stands for Statement of Recommended Practice and is a best practice guide for accountancy in a specialised sector. It is normally issued by the regulatory body relevant to that sector and recognised by the ASB (Accounting Standards Board). The latest Charities SORP was issued in 2000. Although it is not itself mandatory, charity accruals accounts that conform with it will show a true and fair view and thus meet the requirements of the Charities Act 1993 or Companies Act 1985. A non-company charity which follows the Charities SORP will be following the Charity (Accounts and Reports) Regulations issued in 1995 & 2000. The Charities SORP also contains a section outlining preparation of non-accruals accounts. The Commission therefore expects all charities to follow the Charities SORP.

Charity Commission SORP 2

Question: Who can carry out a charity audit?

Answer: A charitable company's accounts must be audited by a registered auditor who is authorised to audit company accounts. A non-company charity's accounts must normally be audited by a registered auditor authorised to audit company accounts or a member of a recognised body named in the Regulations under Part VI, Charities Act 1993 and eligible under the rules of that body to audit charities. In some circumstances the Audit Commission is authorised by the Charity Commission under S9(2)a of the 1995 Regulations to audit the accounts of a non-company charity connected with local authorities or the NHS.

Charity Commission SORP 3

Question: If a charity is required to have an audit carried out due to the level of incoming resources or expenditure, but then is below the threshold in the following years, is an audit still required?

Answer: Yes. The Charities Act 1993 requires an audit to be carried out if the charity’s gross income or total expenditure exceeds £250,000 in either:

(a) The relevant year or

(b) The financial year immediately preceding the relevant year or

(c) The financial year immediately preceding the year specified in paragraph (b) above.

Therefore, once an audit is required, there is a further requirement for an audit to be carried out for the following two years.

Charity Commission SORP 4

Question: Who can be an independent examiner of a charity?

Answer: An independent person who is reasonably believed by the Trustees of the charity to have the requisite ability and practical experience to carry out a competent examination of the accounts of that charity for that year. Because of the likely accounting complexities involved, the Commission's recommendation is that a suitably qualified accountant be appointed if gross income is over £100,000 or gross assets exceed £1 million.

Charity Commission SORP 5

Question: Who would NOT be considered independent in the context of an independent examiner?

Answer: The following would be considered not to be independent: * A trustee * Someone involved in the administration of the charity * A major donor or beneficiary * A close relative, business partner or employee of any of the above. If a potential independent examiner of church's accounts was on the membership roll, this is not a sufficient bar to him/her becoming an examiner, provided he/she does not fall into any of the unacceptable categories above.

Expanded Answer: A useful test of independence is to ask whether the person being considered would be independent enough to write an adverse report on the accounts or to 'whistleblow' on bad practice where either of these situations may lead to prosecution.

Charity Commission SORP 6

Question: Do exempt or excepted charities have to comply with the Charities Act accounting and reporting regime, the regulations, the Charities SORP?

Answer: Unregistered charities which are exempt or excepted have some reduced requirements under Part VI of the 1993 Charities Act. These are summarised in a separate page (Exempt and Excepted Charities)

>Charity Commission

SORP

Question: What accounting records must a non-company charity keep, and for how long?

Answer: Under the 1993 Charities Act, the accounting records should be retained for at least six complete years in addition to the current year and must be capable of showing, with reasonable accuracy, the financial position of the charity at any point during that period . The accounting records must contain: (a) Entries showing from day to day all sums of money received and expended by the charity, and the matters in respect of which the income and expenditure takes place; and (b) A record of the assets and liabilities of the charity with sufficient explanation to enable proper accounts to be prepared at any time.

SOFA

SOFA stands for Statement of Financial Activities. A charity's SOFA shows all the incoming resources becoming available during the year and all its expenditure for the year, and reconciles all the changes in its funds. The SOFA should account for all the funds of the charity and should be presented in columns representing the different types of funds

See OG 15 C8.

Understanding Finance Basics

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