IOF Cornwall Trustees & Senior Managers Conference – 16th November, 2011 1
Everything you wanted to know about charity accounts but were afraid to ask.
Chris DennisDirector
Community Accounting Services KernowCommunity Interest Company
IOF Cornwall Trustees & Senior Managers Conference – 16th November, 2011 3
Question 1
SORP stands for Statement of Required Practice
TRUE or FALSE?Answer
FALSE – Statement of Recommended Practice
Format of the accounts for all charities.Accounts must be prepared according to SORP with exceptionsLatest SORP in 2005 next in 2012 with not too many changes
IOF Cornwall Trustees & Senior Managers Conference – 16th November, 2011 4
Question 2
SORP doesn’t apply if your income is less than £25,000
TRUE or FALSE?Answer
FALSE – All charitable companies have to use SORP
Unincorporated charities can use simpler receipts and payments accounts up to £250k income.Other things apart from the layout covered by Charities Act 2006 with changes up to 2008. i.e. whether audit is needed.
IOF Cornwall Trustees & Senior Managers Conference – 16th November, 2011 5
Question 3
SOFA, a part of SORP, stands for Statement of Financial Activities. TRUE or FALSE?
Answer
TRUE
Updated in SORP 2005. No management and administration anymore.All income and expenditure matched in the same categories.
IOF Cornwall Trustees & Senior Managers Conference – 16th November, 2011 6
INCOMING RESOURCES RESOURCES EXPENDED
Incoming Resources from Generated Funds Cost of generating funds
Voluntary income Cost of generating voluntary income
Activities for generating funds Fundraising trading, events, goods
Investment income Investment management costs
Incoming Resources from Charitable Activities Charitable Activities
Activity A Activity AActivity B Activity BActivity C Activity C
Governance Costs
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Question 4
Support Costs (overheads, core costs, central costs) can be part of the cost of charitable activities.TRUE or FALSE?
Answer
TRUESORP 2005 recognised that all costs are part of Generating Funds, Charitable Activities or Governance.Costs must be apportioned between those three categories in a reasonable, justifiable and consistent way.Support costs enable those activities to take place.Difficult to compare administration costs but some grant makers do.
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Question 5
Accrual accounting is recognising income when earned and expenditure when incurred not when received or paid for.TRUE or FALSE?
Answer
TRUE
All charitable companies must prepare accounts using accrual accounting and all over £250k income. Income should be recognised with entitlement, certainty and measurement.
IOF Cornwall Trustees & Senior Managers Conference – 16th November, 2011 9
Jan-Mar Apr-Jun Jul-Sep Oct-Dec
Insurance Cash £1,000
Accrual £250 £250 £250 £250
Electricity Cash £400
Accrual £300 £100
Grant Cash £1,000
Accrual £1,000
IOF Cornwall Trustees & Senior Managers Conference – 16th November, 2011 10
Question 6
Only charities with an income of over £500,000 need to have an audit.TRUE or FALSE?Answer
FALSE – If your assets are over £3.26M or your governing document requires it you need to have a full audit.
Could change your governing document by resolution.Independent examination is perfectly acceptable to most funders.
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Question 7
The treasurer in a charity is ultimately responsible for the money.TRUE or FALSE?
Answer
FALSE – All trustees have equal responsibility
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Question 8
It is against the law to sign a blank cheque.TRUE or FALSE?
Answer
FALSE
It’s not illegal but something you should never do.
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PRIZES
Q & A
Everything you need to knowhttp://www.sayervincent.co.uk/publications/made_simple_guides
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