cipfa.org.uk
Charity accounting …
… opportunities …
John Maddocks
cipfa.org.uk
The charity landscape







Over
Most
Over
Over
Over
Over
Over
160,000 charities in England & Wales
charities are small
123,000 (75%) income < £100,000
143,000 (87%) income < £500,000
900,000 trustees
2,600,000 employees
1,900,000 volunteers
Source: Charity Commission Dec 2013 statistics
cipfa.org.uk
Legal structures
Legal form
Governing
document
Other
regulator
Association
Constitution
No
Trust deed
No
Memorandum and
articles of
association
Companies
House
Rules
FCA
Trust
Company
Industrial & Provident
Community Benefit
Society
Charitable Incorporated
Organisation
Constitution
No
cipfa.org.uk
Legislation & regulation
 The Charities Act 2011 consolidated the 1993 Act and
other related enactments
www.legislation.gov.uk/ukpga/2011/25/contents
 Charities (Accounts and Reports) Regulations 2008
www.legislation.gov.uk/uksi/2008/629/contents/made
 Charity Commission is the registrar and regulator for
charities in England and Wales
www.charitycommission.gov.uk/
 Other legislation and regulation depending on legal
structure
cipfa.org.uk
Annual returns
 Income > £10,000, file Annual Return within
10 months of end of financial year
 Income > £25,000, accounts attached
 If charity is also a company, then a Company
Annual Return also has to be completed
 Accounts to Companies House within 9 months
cipfa.org.uk
Annual statement of accounts
 Trustees responsible for preparation of accounts
 Gross income of £250,000 or less – can opt for
receipts and payments accounts but only if:
 Unincorporated or
 CIO
 Other registered charities comply with the SORP
cipfa.org.uk
Charities SORP accounts include …






Trustees’ report
Statement of Financial Activities (SOFA)
Summary income & expenditure account (in certain cases)
Balance sheet
Cash flow statement
Notes to the accounts
 NEW SORPs due out summer 2014 (FRS102 & FRSSE)
 For implementation January 2015
 www.charitysorp.org
cipfa.org.uk
Annual audit or examination
 Charity regulations set out thresholds for audit and
independent examination
 Thresholds can be amended in future
 Three types of assurance:
a. Audit
b. Independent examination by someone on
prescribed list (income up to £500,000)
c. Independent examination by someone with
requisite ability income (income up to
£250,000)
cipfa.org.uk
Independent examiners
Income up to £500,000 & assets
under £3.26m. Prescribed bodies:











Institute of Chartered Accountants in England and Wales
Institute of Chartered Accountants of Scotland
Institute of Chartered Accountants in Ireland
Association of Chartered Certified Accountants
Association of Authorised Public Accountants
Association of Accounting Technicians
Association of International Accountants
Chartered Institute of Management Accountants
Institute of Chartered Secretaries and Administrators
Chartered Institute of Public Finance and Accountancy
Fellow of Association of Charity Independent Examiners
cipfa.org.uk
Audit or independent examination
Gross income and
asset thresholds
Audit
Ind
Ind
exam
exam
(listed) (ability)
More than £500,000
or assets over £3.26m
Yes
No
No
£500,000 or less
Yes
Yes
No
£250,000 or less
Yes
Yes
Yes
Guidance at: www.charitycommission.gov.uk/publications/cc32.aspx#3
cipfa.org.uk
Fund accounting
Restricted
Endowment funds
Permanent
Restricted income
Expendable
Unrestricted
General funds
Designated funds
cipfa.org.uk
Charity trading
 Understanding
 Primary purpose trading. Directly in furtherance of
the charity’s objectives.
 Ancillary trading. in support of the main purpose.
 Small scale trading
 Trading subsidiaries
 VAT business and non-business
cipfa.org.uk
Associated services




Payroll
HR and Employment law
Tax
Business planning
cipfa.org.uk
Current CIPFA activity includes …
Charities and social enterprises panel
TISonline – new charities & social enterprises stream
CIPFA Certificate in charity finance and accountancy
CIPFA Certificate in financial reporting for academies
Courses & workshops: Charity accounting,
commissioning, diploma in sustainable investment in
3rd sector
 Research: International NFP accounting standard
 Publications





cipfa.org.uk
CIPFA resources include …
 TISonline: Charities & social enterprises
 Social enterprise and public service
delivery (new edition in 2014)
 Accounting for academies (2013)
 Social enterprise business planning &
assessment (2013)
 Accounting for payment by results
including social impact bonds (2012)
 Financing social enterprise (2012)
 Staff mutuals (2012)
cipfa.org.uk
Questions?
 TISonline: Charities and social enterprises stream
www.tisonline.net/socialenterprise/default.asp
 Charities & Social Enterprises Panel:
www.cipfa.org/Policy-and-Guidance/TechnicalPanels-and-Boards/Charities-and-Social-EnterprisesPanel

John.maddocks@cipfa.org.uk