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Training for New Parish Treasurers: 27 th June 2012 - Isle of Wight. Welcome. Training for New Parish Treasurers: 27th June 2012 - Isle of Wight INTRODUCTION - 1- ( RELAX !).

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  1. Training for New Parish Treasurers: 27th June 2012 - Isle of Wight Welcome

  2. Training for New Parish Treasurers: 27th June 2012 - Isle of WightINTRODUCTION - 1- (RELAX!) • A lot to get through – awareness is the immediate objective - but aimed also as a work of reference so no need for you to try and take it all in this evening! • Contact me later if need be with any problems or for clarification • Please no (deep) questions this evening if possible as a lot to get through – need to keep on track - but very welcome to e-mail me afterwards and obviously also in the future as need be

  3. Training for New Parish Treasurers: 27th June 2012 - Isle of WightINTRODUCTION - 2 - people • Diocesan Directory http://portsmouth.anglican.org/no_cache/information/online_directory/ available on line if you have access - invaluable source of people information including the Bishop, Archdeacons, Deans, PCC Incumbents, Church Wardens, Hon Secretaries, Hon Treasurers and PCC members. Also diocesan Heads of Section and diocesan staff • Diocesan CEO Revd Wendy Kennedy (Diocesan Secretary)

  4. Training for New Parish Treasurers: 27th June 2012 - Isle of WightINTRODUCTION - 3 - Mission 1 • http://www.churchofengland.org/ • Mission - The Five Marks of Mission • The Mission of the Church is the mission of Christ • http://www.anglicancommunion.org/ministry/mission/fivemarks.cfm

  5. Training for New Parish Treasurers: 27th June 2012 - Isle of WightINTRODUCTION - 4 - Mission 2 • To proclaim the Good News of the KingdomTo teach, baptise and nurture new believers To respond to human need by loving service To seek to transform unjust structures of society To strive to safeguard the integrity of creation and sustain and renew the life of the earth

  6. 1 HANDOVER FROM OUTGOING TREASURER • RULE NUMBER ONE • PREFERABLY OVER A REASONABLE PERIOD • BUT NOT ALWAYS POSSIBLE – HOWEVER DEVELOP AWARENESS WITHIN PCC OF DESIRABILITY OF THIS (INCUMBENT, CHURCH WARDENS, SECRETARY – AND TREASURER) - TEAM WORK! • ASSISTANT TREASURER IF POSSIBLE - CONTINUITY, BACKUP SUPPORTING RESOURCE, SHARE

  7. 2 Invaluable website link – 1 www.parishresources.org.uk • Especially“Resources for Treasurers”section –Reporting and Accounting – Audit and Independent Examination – Treasurers Guide 1 = Roles etc, TG 2 = Financial Procedures • Also “What type of Accounts”? > The Charities Act and the PCC – Statement of Recommended Practice - SORP 2005http://www.churchofengland.org/media/37446/charitiesact.pdf > especially Chapter 14 Practical Examples (St. Emilion’s Barchester)

  8. 3 Invaluable website link – continued – 2 www.parishresources.org.uk • PLUS: http://www.churchofengland.org/media/37446/charitiesact.pdf • http://www.charity-commission.gov.uk/Charity_requirements_guidance/Accounting_and_reporting/Preparing_charity_accounts/default.aspx • Shouldinclude everything you could possibly need (probably!) • However……..

  9. 4 The Legal Responsibilities of PCCs and their Trustees - 1 • The Church of England has produced a summary booklet of the responsibilities of PCC’s, combining references to both the relevant measures governing PCC’s and the overall responsibilities of trustees. This may be accessed at:- • http://www.parishresources.org.uk/charity/Trusteeship%20leaflet%208pp.pdf

  10. 5 The Legal Responsibilities of PCCs and Their Trustees - 2 - The Measures in more detail - 1 • PCCs are governed by two pieces of CoE legislation – namely: • 1 The Parochial Church Councils (Powers) Measure 1956 as amended. This defines the principal function, or purpose, of the PCC as “promoting in the parish the whole mission of the Church”.

  11. 6 The Legal Responsibilities of PCCs and Their Trustees - 3 - The Measures in more detail - 2 • 2 The Church Representation rules (contained in Schedule 3 to the Synodical Government Measure 1969 as amended). • Both documents may be accessed at: http://wwp.parishresources.org.uk/charity/gds.htm

  12. 7 The Legal Responsibilities of PCCs and Their Trustees - 4 - The Responsibilities of Trustees - 1 • Parochial church councils (PCCs) are charities and as such appoint trustees who are required to meet a range of legal responsibilities. Links to guidance notes on the most critical and relevant of these responsibilities follow.

  13. 8 The Legal Responsibilities of PCCs and Their Trustees - 5 - The Responsibilities of Trustees – Links - 1 • Recruiting trustees: http://www.charity-commission.gov.uk/Publications/cc30.aspx • Trustees declaration form: http://www.charity-commission.gov.uk/library/guidance/sampledeccc30.pdf

  14. 9 The Legal Responsibilities of PCCs and Their Trustees - 6 - The Responsibilities of Trustees – Links - 2 • The responsibilities of a trustee: http://www.charity-commission.gov.uk/Publications/cc33.aspx • Trustees checklist: http://www.charity-commission.gov.uk/Publications/cc8check.aspx

  15. 10 The Legal Responsibilities of PCCs and Their Trustees - 7 - The Responsibilities of Trustees – Links - 3 • Summary guide: http://www.charity-commission.gov.uk/library/guidance/cc3 easy.pdf

  16. 11 Topics to be covered in following slides - 1 • Charity status • Which type of Accounts? • SOFA – Statement of Financial Activities (per Fund) • Independent Examiner • Responsibilities • Handling receipts & payments • Reporting requirements • Record keeping (Methods, Income, Expenditure, Agent, Funds, Bank Recs)

  17. 12 Topics to be covered in following slides - 2 • Gift Aid • “Acting as an Agent” (Non PCC) – examples • Movements on Funds • Balance Sheet (“triple entry”) • Bank reconciliations • Financial Management • Be aware of, perhaps more for the future • Year End Schedule • Resources available to you • KEEP IT ALL PROPORTIONATE

  18. 13 Charity Status (NB turnover thresholds under review) • Normal turnover (significantly) below £100,000 per annum = Excepted • Turnover (“normal”) in excess of £100,000 per annum = required to register as a charity in own right with Charity Commission (2006 Act) • Turnover includes all income – Unrestricted, Restricted, Endowment – but NOT endowments or loans received (or loans repaid to the PCC) • Apply for Letter of Determination from CC if exceptionally exceed £100,000

  19. 14 Charity Status – Registered (No.) Charity PCCs need to file Annual Return and Accounts with Charity Commission each year • This must be lodged no later than 10 months after the accounting year end – for PCCs this is 31st October following the previous 31st December year end. • Link is: http://www.charity-commission.gov.uk/Charity_requirements_guidance/Accounting_and_reporting/Preparing_annnual_returns/When_to_send_annual_return_index.aspx • Must include Registered Number and refer to registered charity status in Annual Accounts and PCC Annual Report.

  20. 15 Charity Status – Excepted Charity – just so you know • Most PCCs (those with NORMAL income under £100,000) are legally excepted from having to register with the Charity Commission. In all other ways they are a full charity in their ownright. The exception is now granted under the Charities Act 2011. No Annual Return. • Precise new references relating to the Charities Act 2011 will be circulated in the near future • PCC Annual Report and Accounts should refer to Excepted status

  21. 16 Which type of Accounts? • Turnover below £250,000 per annum MAY prepare Receipts and PaymentsAccounts but all CAN prepare Accounts using Accruals Accounting (better option for good financial management and budgeting) - “proper” Balance Sheet • Turnover above £250,000 MUST use Accruals Accounting • Monthly Reporting should enable Annual Accounts to be prepared relatively “seamlessly” – try to tee up accordingly

  22. 17 Receipts & Payments approach to Accounts – STATEMENT OF ASSETS AND LIABILITIES AT YEAR END • NOT a Balance Sheet but can provide “illusion” of being a Balance Sheet • Can be confusing! • Include investments at Market Value (MV) • “Proper” Accruals Accounts with complete “proper” Balance Sheet much better!

  23. 18 SOFA – Statement of Financial Activities (per Fund) • Incoming Resources • Resources Used • Excess of Incoming Resources over Resources Used (or vice versa)

  24. 19 “Real World” PCC Accounts - 1 • Format not prescriptive – but see model accounts (resources) • Do please ensure all relevant details, provided, including as to type of fund and link to relevant bank account etc including whether or not current or deposit account – TRANSPARENCY and “business” management / best practice • AVOID large sums held on current account!

  25. 20 “Real World” PCC Accounts - 2 • NB Accounts, Notes to Accounts, Accounting Policies and Independent Examiner’s Report – also PCC Annual Report – ALL 3 NEED TO BE SIGNED ! • Need to send a signed hard copy of Accounts including signed Independent Examiner’s Report and signed PCC Annual Report to the diocese, marked for my attention please – plus an electronic copy via e-mail if possible

  26. 21 Independent Examiner • ALL PCC’s MUST obtain Independent Examiner’s Report – no de minimis – Church Accounting Regulations 2006 • Independent Examiner’s Report should be in prescribed format (see model Accounts) updated with references to Charities Act 2011 • If turnover greater than £250,000 Independent Examiner must be member of an approved professional organisation • Full audit required if turnover exceeds £500,000 per annum (more expensive)

  27. 22 INDEPENDENT EXAMINER SHOULD TRY TO VERIFY EXISTENCE OF ASSETS • Independent Examination is NOT an audit but is a very responsible role – NOT a “rubber stamp” approach • Independent Examiner should try to OBTAIN UNAMBIGUOUS INDEPENDENT VERIFICATION THAT SUBSTANTIAL (INVESTMENT) ASSETS EXIST • Authority will need to be given to investment provider to provide such confirmation direct to Independent Examiner – BUT NB THERE WILL BE A CHARGE PER ITEM (perhaps £25)……

  28. 23 Hon Treasurer’s Responsibilities • Accountable to the PCC – “Navigator” • Recording income and expenditure • Looking after the funds • Reporting the financial position • Segregation/delegation of duties – ESSENTIAL FOR ALL PARTIES – COVER EVERYBODY’S BACK !!!!! • Others eg arranging insurance cover, keeping an assets register, maintaining records for gift aid, paying staff…..

  29. 24 FRAUD PREVENTION – VITAL - 1 • Scarcely believable but sadly it can sometimes happen • ALL BE ALERT AT ALL TIMES – question! • Signatories for cheques and investments – bank mandate should not only be updated but CHECKED PERIODICALLY TO ENSURE THE CURRENT SIGNATORIES ARE THOSE MANDATED BY THE PCC FOR THIS • Copy Bank Statements to Incumbent or Churchwarden – query anything unusual especially large receipts and payments

  30. 25 FRAUD PREVENTION – VITAL - 2 • Instructions to be clear with Investment provider that any encashment of investments MUST be signed off by Incumbent, Churchwarden and Treasurer with signed supporting PCC Minute (see below) • PCC Minute for all movements of Investments – signed by Incumbent, Churchwarden and Treasurer • Independent Examiner should try to verify existence of assets

  31. 26 FRAUD - THE “LITMUS” TEST - 1 • Even where there is no “proper” Balance Sheet the assets should still reflect the surpluses or deficits shown by the Accounts • So – if there is a deficit of let us say £10,000 then the assets should decrease by £10,000 (and of course vice versa) • This is especially the case if several years are reviewed as a block

  32. 27 FRAUD - THE “LITMUS” TEST - 2 • A “proper” Balance Sheet as per Accruals Accounts would reveal “asset imbalance” more accurately than a Statement of Assets and Liabilities however the principle holds good • Where there are substantial deficits which are not “officially” reflected in asset outflows then it may be that the assets no longer in fact exist – NB!

  33. 28 Handling Receipts & Payments - Receipts • Receipts (Avoid “Netting Off”) • 2 independents to count and record cash • Clear audit trail • Bank promptly • Issue receipts/acknowledgements • Audit Trail • Transparency

  34. 29 Handling Receipts & Payments - Payments • Payments (Avoid “Netting Off”) • AVOID CASH PAYMENTS • 2 signatures on cheques – review signatories regularly • NO SIGNED BLANK CHEQUES • Standing orders • Online banking • Written instructions • Audit Trail • Transparency

  35. 30 Reporting Requirements • To PCC • At least quarterly - written record • Cash position • Performance against budget • To Parish • APCM • One-off appeals • To Authorities • Annual Report and Accounts • Governed by Charities Commission

  36. 31 Record Keeping • Recording Methods • Recording Income • Recording Expenditure • Acting as an Agent • Recording Movements on Funds • Bank Reconciliations

  37. 32 Recording Methods • Manual system • Spreadsheets e.g. Excel • General accounting packages • Specialist packages – e.g. Finance Co-ordinator – Data Developments (see link later) – integrated and updated – but NB cost • USE WHAT WORKS FOR YOU • BACKUP BACKUP BACKUP !!!!!!! INCLUDING INDEPENDENT (REMOTE) BACKUP !!!!!!!

  38. 33 Recording Income - 1 • Voluntary Income • Regular giving • Planned giving • Collections • Tax recovered • Other • Grants • Legacies

  39. 34 Recording Income - 2 • Activities for generating funds • Income from investments • Church activities • Other incoming resources

  40. 35 Recording Expenditure • Cost of generating voluntary income • Fund-raising trading costs • Church activities • Governance costs

  41. 36 Gift Aid - 1 • Currently 25p tax back for every £10 NET donation (£10 x 100/80 = £12.50; £12.50 x 20% = £2.50) • Vital source of additional income • Likely to have Gift Aid Officer – good idea – natural delegated role • Diocese can claim centrally on behalf of PCCs – BUT YOU NEED TO PROVIDE THE INFORMATION AND MAINTAIN HMRC AUDIT PROOF RECORDS – VITAL !

  42. 37 Gift Aid - 2 • If you prefer to reclaim direct from HMRC that is fine • CAN use Donations Co-ordinator (but do not have to) – Data Developments – 01962 824044 – initial cost normally £155 (plus training if required) but discount available by going via C of E website: www.parishbuying.org.uk • sales@datadevelopments.co.uk

  43. 38 Gift Aid - 3 • www.datadevelopments.co.uk website has free pdf download of Gift Aid booklet which has much useful information • HMRC charities helpline: 0845 3020203 • http://search2.hmrc.gov.uk/kb5/hmrc/contactus/view.page?record=XqbRdlnT_mo

  44. 39 Gift Aid - 4 - time limits for claims • Now a four year cut-off limit for claiming ANY Gift Aid • 4-year rule: e.g. for 2008 = 1st January 2008 to 31st December 2008 by 31stDecember 2012 (4 years from 1st January 2012, namely start of current 2012 accounting year) • Transitional Relief – 2 years only to reclaim TR (see next slide)

  45. 40 Gift Aid - 5 - Transitional Relief (relates to former 22% rate of tax) • Only two years allowed to claim transitional relief – “rolling” basis • Donations made to 5th April 2011 (FINAL ELIGIBLE TR DATE) must be claimed by 31st December 2013 (similar basis to 4 year claim rules) • TR on donations to 5th April 2010 must be claimed by 31st December 2012 (any earlier now out of time) • Claim sooner rather than later – don’t wait!

  46. 41 Gift Aid - 6 • BE AWARE OF NEW MORE GENEROUS TAX THRESHOLDS !!! MAKE SURE ALL GIFT AID DONORS STILL PAYING TAX ! OBTAIN NEW DECLARATIONS ! • KEEP UP TO DATE! DEVELOPMENTS • HMRC PENALTIES……. • Catherine Gray: 02392 899650 - catherine.gray@portsmouth.anglican.org • NB NEWSLETTERS!

  47. 42 “Acting as an agent” (Non PCC) • NOT part of the parish income and expenditure • Examples • Clergy fees to be assigned • Choir fees to be paid to choristers • Retiring collections for a specific charity – where everyone donates with the clear understanding where their money will go

  48. 43 Examples of Non-PCC receipts • Contras • Fees cancelled – wedding • Flowers cancelled – wedding • Non PCC fees cancelled wedding • Non PCC Christian Aid • Non PCC verger fees • Non PCC DBF fees

  49. 44 Examples of Non-PCC payments • Contras • Fees cancelled – wedding • Flowers cancelled – wedding • Non PCC fees cancelled wedding • Non PCC Christian Aid • Non PCC verger fees • Non PCC DBF fees Yes they should be equal and opposite – subject to timing differences – (at year end) bring in debtor or creditor if need be

  50. 45 Movements on Funds - 1 • Endowment Funds – income can ONLY be used in accordance with terms of Endowment – CAPITAL MUST BE PRESERVED • Restricted Funds – again can only be used in accordance with terms of bequest or origin of fund

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