Branch Accounting Guidance Notes
Introduction
In order to regularise the Institute's VAT position, since 1 July 1996 UK branches of the Institute have
been required to comply with a new accounting procedure specified by the auditors. The basic objective
is to separate the branches' social activities from those aspects which will now fall within the definition of
the Institute's official business operations.
Definitions
Branch Meeting and Social Activities :Branch meetings and quiz nights
Branch technical and social visits
Dinner-dances, dinners, lunches etc
Other social functions
Golfing and other sporting events
Tombolas, raffles and other fund-raising activities.
Branch Business Activities :Seminars, courses and other such events for which a registration fee is charged
Branch programmes which contain paid advertising
Any other activities of a business nature for which a charge is made.
Procedure
From 1 July 1996 branches must classify each of their activities (occurring after that date) into one or
other of the above two definitions.
If there is any doubt over how to classify a branch activity, advice should be sought from Lyn Bryden at
Institute headquarters in Nottingham.
Once activities are classified, the specific requirements set out below must be rigorously applied, or the
Institute may run the risk of problems with HM Customs and Excise.
Branch Meeting and Social Activities
All bank (current and deposit), building society or other investment accounts maintained by branches
must be re-named (or closed and new accounts opened as appropriate) so that the name, both on the
account and on cheque-books, clearly indicates that it is a branch members' social account and not an
official account of the incorporated Institute.
The recommended format for the title of such accounts is - The Institute of Quarrying xxxx Branch,
Social Account. Unless this is done, the donation (see 4.p.) by Nottingham of profits earned on branch
business activities may not be accepted for deposit by the bank; (ie cheques from Nottingham will be
made out to The Institute of Quarrying xxxx Branch, Social Account).
These accounts should be used only to operate branch meeting and social activities as defined above
and such funds cannot be used for branch business activities.
Branch members are deemed to be responsible for operating branch meetings and social activities on
their own account, rather than for, and on behalf of, the corporate body.
As of 1 July 1996, a new Public Liability Insurance policy will be taken out specifically to provide cover
for branch members whilst acting in this capacity.
Branch Business Activities
As in the past, branches will be wholly responsible for the planning and organisation of all their own
branch business activities.
All correspondence associated with branch business activities must be on a letterhead which bears the
Institute's name, address of registered office, registered number, in addition to the information relevant
to the branch, such as the Branch name and the name and address of the Branch Secretary.
For legal, accounting and VAT purposes, all financial transactions must be processed through Institute
headquarters in Nottingham and will form part of the audited accounts of the incorporated body.
As these activities cannot be subsidised from branch social funds, and will not be subsidised by the
Institute, it is essential that such events, publications etc are operated on a properly viable basis.
For the avoidance of doubt, it is recommended that branch seminar booking forms clearly state the cost
of the seminar, the amount of VAT applicable, the gross amount payable, and that an invoice will
subsequently be issued (by Nottingham). Advertisers in branch programmes should be advised
similarly.
If pre-payment is required by a branch to secure a seminar place, the booking form should direct that
such cheques be forwarded to the organising branch, made payable to The Institute of Quarrying. These
cheques should not be banked by the branch, but forwarded en bloc to Nottingham.
In respect of branch programme booklets, it is recommended that written acceptance of the
advertisement fee and any artwork charges be obtained from advertisers.
In the event that an advertiser refuses to pay an invoice for any reason, the matter will be referred to the
branch officer responsible to resolve. It is the responsibility of the branch officer concerned to advise
Nottingham subsequently if any credit note is to be issued.
Once arrangements for a specific business activity have been finalised, a single document (see
attached specimen) must be forwarded to the Treasurer setting out:The projected profit and loss account
The sales invoice details
The suppliers to be paid
In order to allow for VAT recovery (where applicable), all suppliers must be advised that their invoices
should be made out to The Institute of Quarrying, xxxx Branch and addressed to the branch address
(such as the address of the Branch Secretary). In no circumstances should invoices be made out in the
name of an individual only.
VAT recovery will have the effect of reducing the cost of an activity to the branch, thereby increasing the
profit.
Once all suppliers invoices have been received by the Branch Secretary (or person organising the event
or publication) the invoices should be approved by the said person, by signing each invoice, and
forwarded in one batch to the Institute Treasurer.
The Nottingham office will be responsible for invoicing, credit control and payment to the suppliers in
accordance with the Institute's normal procedure.
In the event that there is any difficulty in collecting an outstanding debt the branch concerned will be
asked to assist in securing payment.
Each branch's business activities will be controlled in a separate account in the Institute's nominal
ledger, being debited with expenses and credited with income from each activity.
Once all sales invoices have been paid, in all but exceptional circumstances, the balance on each
account will be passed back to the branch concerned in the form of a donation from the corporate body
to the branch, to be used only for appropriate charitable purposes such as donations to the Educational
Development and Benevolent Funds, support for technical meetings, etc.
In the event that a branch has a loss on its nominal ledger account at the end of a financial year, the
position will be considered by the Finance and General Purposes Committee.
Whilst engaged in branch business activities, members are covered by the Public Liability Insurance
policy taken out in the name of the corporate body.
Limits of Branch Officers' Authority
Bye-Law 15.d establishes that:The Institute shall not be responsible for any liability incurred by or on behalf of any branch beyond any
amount previously appropriated or contributed for any specific purpose by the Council.
Neither a branch nor any of its officers or members shall incur any liability or enter into any contract or
commitment in the name or on behalf of the Institute without express authority of the Council, and
Any officer or member of a branch who incurs any liability or enters into any contract or commitment
without the express authority of the Council shall be personally responsible and shall indemnify the
Institute from and against all and any damages, costs, claims, actions and demands arising out of or in
connection with any such liability, contract or commitment.
It is proposed the Council resolve that until further notice each branch has general authority to enter into
the following commitments in the name of or on behalf of the Institute at a maximum aggregate cost in
each (calendar) year for each item not exceeding the figure set out below in brackets next to that item,
namely:Branch Programme booklets - maximum annual cost £2,500
Branch Seminar - maximum annual cost £5,000
Any other legitimate business activity - maximum annual cost £2,000
NB. All figures indexed to RPI from January 1997
If a Branch wishes to exceed the maximum annual cost for any commitment or to incur any other
commitment in the name of or on behalf of the Institute it shall first supply full details to and obtain the
written approval of the Institute. If such approval is refused or granted on conditions which are
unacceptable to the branch the matter shall at the written request of the branch be referred to the next
meeting of the Council.
Where a branch wishes to engage in 'any other legitimate business activity' (whether involving an
annual cost of up to £2,000 or above this amount) or 'to incur any other commitment in the name of the
Institute', the following procedure should be adopted:
Details should be forwarded in writing to the Institute's Secretary
The information should indicate whether the Institute's coat of arms is to be used
Details of any associated individuals, companies or societies should be given
Anticipated financial commitment and benefit should be quoted
No firm commitment to proceed should be made until approval has been received in writing from the
Secretary