Technical Briefings
10 December 2010
WK Charity update - December 2010
Welcome to the latest edition of WK Charity Update
This December update will provide you practical tips on topical charity issues, discussing legislation changes and how we can help you.
Click on the links below to go directly to that section.
- Changes to financial reporting in the UK
- SORP update news
- Gift Aid: End of Transitional Relief
- Good Governance Update
- Bribery Act 2010
- 'Key dates'
If you have any questions regarding any of the topics covered please contact your nearest WK office who will be happy to answer any queries.
John Howard
Partner, Head of Charity and Not-for-Profit Group
john.howard@wilkinskennedy.com
Michelle Wilkes
Partner, Charity and Not-for-Profit Group
michelle.wilkes@wilkinskennedy.com
Changes to Financial Reporting in the UK
The Accounting Standards Board (ASB) has published its proposals for a three-tier reporting framework for companies and other entities reporting in the UK and the Republic of Ireland. This aims to simplify the form and content of UK reporting standards and to explain to companies which standards apply to them.
The three tiers expand and develop the current structure:
- Tier 1:
- International Financial Reporting Standards (IFRS), which will apply to quoted companies and certain unquoted entities that have ‘public accountability’ (generally in the financial services sector).
- Tier 2:
- International standards for small and medium-sized entities (IFRS for SMEs), called the FRSME.
- Tier 3:
- The Financial Reporting Standard for Smaller Entities, the FRSSE, for those defined, as now, as small entities.
The ASB is at the same time and with charities in mind developing a tailored Public Benefit Entities (PBE) standard which will be designed to be used primarily by PBEs in Tier 2 and will affect charities that use UK reporting standards. Consultation on the proposals runs until 30 April 2011 and it is proposed that the new framework will be effective from 1 July 2013.
Further details can be found at: www.frc.org.uk/asb/press/pub2414.html
SORP update news
The SORP Committee have announced that in light of the review and consultation being undertaken by the ASB, described above, the next charity accounting Statement of Recommended Practice (SORP) is likely to be issued no earlier than March 2012.
The Committee’s opinion was that any new SORP should be developed taking into account both the new IFRS based UK Standards and the new PBE standard.
For further information about the work of the SORP Committee go to the Charity Commission’s website at:
Gift Aid: End of transitional relief
Following the fall in the basic rate of income tax from 22% to 20% in the March 2008 budget a transitional relief was provided by the Government worth 3p for every £1 donation they received under gift aid to offset the fall. Despite lobbying by the sector, this transitional relief is due to expire on 5 April 2011.
Prior to 6 April 2011 for every pound donated by individuals under gift aid a charity will receive 28p. As from 6 April 2011, this will fall to 25p for every pound donated.
Charities will therefore benefit if they can persuade any of their individual donors to make their donations on or before 5 April 2011.
Good Governance Update
In October 2010 a Steering Group comprising various sector representatives, with support from the Charity Commission, issued an update to the Code of Good Governance. A useful document for all trustee boards, this is described on the Commission’s website as,
‘The revised Code is based on six key principles describing how an effective board provides good governance and leadership:
1. Understanding their role;
2. Ensuring delivery of organisational purpose;
3. Working effectively both as individuals and a team;
4. Exercising effective control;
5. Behaving with integrity;
6. Being open and accountable.
The Code can be downloaded from the Commission’s website at:
www.charity-commission.gov.uk/Charity_requirements_guidance/Charity_governance/Good_governance/governancecode.aspx
Bribery Act 2010
The Bribery Act, which received Royal Assent on 8 April, will be brought into force in April 2011. This legislation consolidates and brings up-to-date a number of older Acts, sets out five criminal offences relating to either giving or accepting bribes and provides definitions of what constitutes a bribe.
Charities, particularly those with staff working overseas need to be particularly aware of section 7 which refers to the ‘failure of commercial organisations to prevent bribery’. The definition of ‘commercial’ in this context is questionable but all charities should ensure that they have adequate procedures in place that aim to prevent acts of bribery taking place on their behalf.
There is further information about the Act on the ICAEW website and further information on the Ministry of Justice website about what may constitute ‘adequate procedures’.
‘Key Dates’
- VAT rate increasing from 17.5% to 20% from 1st of January 2011 - ensure any major expenditure is incurred before that date, where possible, to obtain the lower VAT rate.
- 31/3/10 year ends : The filing deadline for incorporated charities is reduced to 9 months for filing at companies house, ie 31/12/10. The filing deadline with the Charity Commission remains the same (10 months).
