SORP 2005 for PCC Treasurers Statement of Recommended Practice
SORP 2005 Statement of recommended practice. Contents What is changing What is changing SORP 2005...
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Transcript of SORP 2005 Statement of recommended practice. Contents What is changing What is changing SORP 2005...
ContentsContents
What is changingWhat is changing SORP 2005SORP 2005 Charities ActCharities Act
Trustee responsibilities for Accounts Trustee responsibilities for Accounts and reportsand reports
RequirementsRequirements Book keepingBook keeping Receipts and Payments accountsReceipts and Payments accounts Accruals accountsAccruals accounts The Annual reportThe Annual report
What changes under SORP What changes under SORP 20052005
It applies to ALL churchesIt applies to ALL churches It applies to all accounts for It applies to all accounts for
periods ending after 31 March periods ending after 31 March 20062006
The accounts and annual report The accounts and annual report are effectively combinedare effectively combined
The report and accounts should The report and accounts should show how the church has show how the church has performed against its objectivesperformed against its objectives
What is comingWhat is coming A new Charities Act probably in 2007A new Charities Act probably in 2007 Churches will cease to be “excepted” Churches will cease to be “excepted”
and be covered by normal Charities and be covered by normal Charities act and treated like all other charities act and treated like all other charities probably from October 2007probably from October 2007
Only largest churches will need to Only largest churches will need to register (> £100,000 turnover)register (> £100,000 turnover) Others can registerOthers can register Registered churches will get a Charity Registered churches will get a Charity
NumberNumber Registered charities must submit a Registered charities must submit a
return to the Charity Commissionersreturn to the Charity Commissioners
Trustee responsibilitiesTrustee responsibilities
The report and accounts are the The report and accounts are the responsibility of the Trustees not responsibility of the Trustees not just the Treasurer!just the Treasurer!
The Trustees are accountable for The Trustees are accountable for the way the resources are usedthe way the resources are used Usually the Elders Meeting are the Usually the Elders Meeting are the
TrusteesTrustees Status of finance should be Status of finance should be
reviewed regularlyreviewed regularly
The Annual reportThe Annual report It should tell the story of the church It should tell the story of the church What is the church trying to doWhat is the church trying to do How is it going about itHow is it going about it Content is more definedContent is more defined Should contain the following sections:Should contain the following sections:
Reference and administrationReference and administration Structure, governance and managementStructure, governance and management Objectives and activitiesObjectives and activities Achievements and performanceAchievements and performance Financial reviewFinancial review Plans for future periodsPlans for future periods
Statement from Auditor/ExaminerStatement from Auditor/Examiner
The Annual Report - 1The Annual Report - 1
It must contain:It must contain: Administration detailsAdministration details
– The name of the church or charityThe name of the church or charity– Charity Registration number (if Charity Registration number (if
applicable)applicable)– The address of the church and for The address of the church and for
correspondence if differentcorrespondence if different– The names of the trusteesThe names of the trustees
Usually the serving elders Usually the serving elders Including those retiring and Including those retiring and
appointed during accounting period appointed during accounting period & up to approval date& up to approval date
The Annual Report - 2The Annual Report - 2 The constitution or legal frameworkThe constitution or legal framework
The URC ActsThe URC Acts Appointment of trusteesAppointment of trustees Objectives and purposeObjectives and purpose Achievements and performanceAchievements and performance
Numbers or members, average attendanceNumbers or members, average attendance Special eventsSpecial events
Purpose of special or designated fundsPurpose of special or designated funds Reserves policyReserves policy The accounts and report should be The accounts and report should be
presented and approved by Elders or a presented and approved by Elders or a church meetingchurch meeting
Size of accountsSize of accounts Based on greater of income or expenditureBased on greater of income or expenditure Up to £10,000Up to £10,000
Receipts and payments and assets and liabilities; Receipts and payments and assets and liabilities; no independent examinationno independent examination
£10,000 to £100,000£10,000 to £100,000 Receipts and payments and assets and liabilities; Receipts and payments and assets and liabilities;
independent examinationindependent examination £100,000 to £250,000£100,000 to £250,000
Accrual accounting, statement of financial Accrual accounting, statement of financial activities plus balance sheet; independent activities plus balance sheet; independent examinationexamination
Over £250,000Over £250,000 Accrual accounting, statement of financial Accrual accounting, statement of financial
activities plus balance sheet; auditactivities plus balance sheet; audit Smaller churches can use accrual accounting; Smaller churches can use accrual accounting;
larger churches must use itlarger churches must use it
Book keepingBook keeping Keep it simpleKeep it simple Show all transactions as grossShow all transactions as gross
Keep records for EVERY transactionKeep records for EVERY transaction Separate fundsSeparate funds
UnrestrictedUnrestricted DesignatedDesignated RestrictedRestricted EndowmentEndowment
Reconcile against bank Reconcile against bank statementsstatements
Take care over cash handlingTake care over cash handling
Receipts and paymentsReceipts and payments Must include all funds of church Must include all funds of church
including those of sub-groupsincluding those of sub-groups Simply adds all common Simply adds all common
transactions for the yeartransactions for the year Classifications for income:Classifications for income:
Planned giving; gift aid; grants; money Planned giving; gift aid; grants; money raising; letting; investment income; other raising; letting; investment income; other incomeincome
For expenditureFor expenditure M&M; charitable giving; ministry M&M; charitable giving; ministry
expenses; manse costs; building expenses; manse costs; building maintenance; worship costs; capital maintenance; worship costs; capital expenditure; other costsexpenditure; other costs
Assets and liabilitiesAssets and liabilities Must include ALL assets and all accountsMust include ALL assets and all accounts AssetsAssets
Cash and bank depositsCash and bank deposits Other monetary assetsOther monetary assets
Loans; tax claims made; unpaid accountsLoans; tax claims made; unpaid accounts InvestmentsInvestments Fixed AssetsFixed Assets
Buildings; manses; equipment; cars; Buildings; manses; equipment; cars; LiabilitiesLiabilities
Amounts owed but not paidAmounts owed but not paid Special collections not forwardedSpecial collections not forwarded Grant commitmentsGrant commitments Loans & hire purchaseLoans & hire purchase
Accruals accountsAccruals accounts Income and expenditure related to Income and expenditure related to
accounting periodaccounting period Must includeMust include
Statement of Financial Activities (SOFA)Statement of Financial Activities (SOFA) Balance sheetBalance sheet Notes explaining policies & detailsNotes explaining policies & details
Keep funds separatedKeep funds separated Endowment, restricted, unrestrictedEndowment, restricted, unrestricted
Show previous year figures for Show previous year figures for comparisoncomparison Not by fundNot by fund
Statement of Financial Statement of Financial Activities (SOFA)Activities (SOFA)
Format is prescribed by Charity Format is prescribed by Charity CommissionCommission
IncomeIncome Voluntary incomeVoluntary income
Gifts, donations, collections, gift aid, Gifts, donations, collections, gift aid, legacieslegacies
Grants, gifts in kindGrants, gifts in kind– Details in notesDetails in notes
Activities for generating fundsActivities for generating funds Fund raising events, fees for weddings, Fund raising events, fees for weddings,
shop income, lettingsshop income, lettings Investment incomeInvestment income
Other incomeOther income
SOFA 2SOFA 2 ExpenditureExpenditure
Costs of generating fundsCosts of generating funds Costs of generating incomeCosts of generating income Costs of tradingCosts of trading Investment management feesInvestment management fees
Charitable activitiesCharitable activities M&MM&M Maintenance of church and manseMaintenance of church and manse Clergy expensesClergy expenses Charitable donationsCharitable donations
Governance costsGovernance costs Audit/examination costs and legal and Audit/examination costs and legal and
professional feesprofessional fees Other costsOther costs
SOFA 3SOFA 3
Show any transfers between Show any transfers between fundsfunds
Show any gains/losses on Show any gains/losses on assets and liabilities assets and liabilities (pensions)(pensions)
Show funds at start of year, Show funds at start of year, changes and end of yearchanges and end of year
SOFA notesSOFA notes Disclose details of significant Disclose details of significant
spend or income itemsspend or income items Disclose any payment to trustees Disclose any payment to trustees
including expensesincluding expenses Any wages or salary items split Any wages or salary items split
between salary, NI and pension between salary, NI and pension and average number of staffand average number of staff
If there is a defined benefit If there is a defined benefit pension scheme details are pension scheme details are requiredrequired
Explanation of any unusual itemsExplanation of any unusual items
Balance sheetBalance sheet Format is defined by SORPFormat is defined by SORP Must include all assets and liabilitiesMust include all assets and liabilities Fixed assetsFixed assets
Tangible, heritage, investmentsTangible, heritage, investments– Includes halls, buildings, manses, equipment, carsIncludes halls, buildings, manses, equipment, cars
Clarity required about depreciationClarity required about depreciation Current assetsCurrent assets
Cash, bank and deposit accounts, investments, Cash, bank and deposit accounts, investments, debtorsdebtors
LiabilitiesLiabilities Creditors due within 1 yearCreditors due within 1 year Loans and Long term liabilitiesLoans and Long term liabilities
Net assets/liabilitiesNet assets/liabilities Funds by typeFunds by type
Notes to accountsNotes to accounts
Accounting policies should Accounting policies should be set outbe set out
How assets are valuedHow assets are valued Major incoming and Major incoming and
outgoing resourcesoutgoing resources Purposes of specific fundsPurposes of specific funds Authorisation by trusteesAuthorisation by trustees
SummarySummary
The purpose of the report and The purpose of the report and accounts is to give a clear accounts is to give a clear picture of the churchpicture of the church What is happeningWhat is happening What is goodWhat is good Where there are weaknessesWhere there are weaknesses Actions planned for the futureActions planned for the future
What is plannedWhat is planned
The URC will offer guidanceThe URC will offer guidance The URC will produce shortly a The URC will produce shortly a
model Excel spreadsheet for the model Excel spreadsheet for the accountsaccounts Receipts and paymentsReceipts and payments
The Baptist Union has produced The Baptist Union has produced draft guidance notes which are gooddraft guidance notes which are good
The ACAT document has much The ACAT document has much supporting documentation and supporting documentation and adviceadvice