Transcript SORP 2005
SORP 2005 Statement of recommended practice Contents What is changing SORP 2005 Charities Act Trustee responsibilities for Accounts and reports Requirements Book keeping Receipts and Payments accounts Accruals accounts The Annual report What changes under SORP 2005 It applies to ALL churches It applies to all accounts for periods ending after 31 March 2006 The accounts and annual report are effectively combined The report and accounts should show how the church has performed against its objectives What is coming A new Charities Act probably in 2007 Churches will cease to be “excepted” and be covered by normal Charities act and treated like all other charities probably from October 2007 Only largest churches will need to register (> £100,000 turnover) Others can register Registered churches will get a Charity Number Registered charities must submit a return to the Charity Commissioners Trustee responsibilities The report and accounts are the responsibility of the Trustees not just the Treasurer! The Trustees are accountable for the way the resources are used Usually the Elders Meeting are the Trustees Status of finance should be reviewed regularly The Annual report It should tell the story of the church What is the church trying to do How is it going about it Content is more defined Should contain the following sections: Reference and administration Structure, governance and management Objectives and activities Achievements and performance Financial review Plans for future periods Statement from Auditor/Examiner The Annual Report - 1 It must contain: Administration details – The name of the church or charity – Charity Registration number (if applicable) – The address of the church and for correspondence if different – The names of the trustees Usually the serving elders Including those retiring and appointed during accounting period & up to approval date The Annual Report - 2 The constitution or legal framework Appointment of trustees Objectives and purpose Achievements and performance The URC Acts Numbers or members, average attendance Special events Purpose of special or designated funds Reserves policy The accounts and report should be presented and approved by Elders or a church meeting Size of accounts Based on greater of income or expenditure Up to £10,000 £10,000 to £100,000 Accrual accounting, statement of financial activities plus balance sheet; independent examination Over £250,000 Receipts and payments and assets and liabilities; independent examination £100,000 to £250,000 Receipts and payments and assets and liabilities; no independent examination Accrual accounting, statement of financial activities plus balance sheet; audit Smaller churches can use accrual accounting; larger churches must use it Book keeping Keep it simple Show all transactions as gross Separate funds Keep records for EVERY transaction Unrestricted Designated Restricted Endowment Reconcile against bank statements Take care over cash handling Receipts and payments Must include all funds of church including those of sub-groups Simply adds all common transactions for the year Classifications for income: Planned giving; gift aid; grants; money raising; letting; investment income; other income For expenditure M&M; charitable giving; ministry expenses; manse costs; building maintenance; worship costs; capital expenditure; other costs Assets and liabilities Must include ALL assets and all accounts Assets Cash and bank deposits Other monetary assets Investments Fixed Assets Liabilities Loans; tax claims made; unpaid accounts Buildings; manses; equipment; cars; Amounts owed but not paid Special collections not forwarded Grant commitments Loans & hire purchase Accruals accounts Income and expenditure related to accounting period Must include Keep funds separated Statement of Financial Activities (SOFA) Balance sheet Notes explaining policies & details Endowment, restricted, unrestricted Show previous year figures for comparison Not by fund Statement of Financial Activities (SOFA) Format is prescribed by Charity Commission Income Voluntary income Gifts, donations, collections, gift aid, legacies Grants, gifts in kind – Details in notes Activities for generating funds Fund raising events, fees for weddings, shop income, lettings Investment income Other income SOFA 2 Expenditure Costs of generating funds Charitable activities M&M Maintenance of church and manse Clergy expenses Charitable donations Governance costs Costs of generating income Costs of trading Investment management fees Audit/examination costs and legal and professional fees Other costs SOFA 3 Show any transfers between funds Show any gains/losses on assets and liabilities (pensions) Show funds at start of year, changes and end of year SOFA notes Disclose details of significant spend or income items Disclose any payment to trustees including expenses Any wages or salary items split between salary, NI and pension and average number of staff If there is a defined benefit pension scheme details are required Explanation of any unusual items Balance sheet Format is defined by SORP Must include all assets and liabilities Fixed assets Tangible, heritage, investments – Includes halls, buildings, manses, equipment, cars Clarity required about depreciation Current assets Liabilities Cash, bank and deposit accounts, investments, debtors Creditors due within 1 year Loans and Long term liabilities Net assets/liabilities Funds by type Notes to accounts Accounting policies should be set out How assets are valued Major incoming and outgoing resources Purposes of specific funds Authorisation by trustees Summary The purpose of the report and accounts is to give a clear picture of the church What is happening What is good Where there are weaknesses Actions planned for the future What is planned The URC will offer guidance The URC will produce shortly a model Excel spreadsheet for the accounts Receipts and payments The Baptist Union has produced draft guidance notes which are good The ACAT document has much supporting documentation and advice