1 / 21

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.

keene
Download Presentation

SORP 2005

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. SORP 2005 Statement of recommended practice

  2. 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

  3. 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

  4. 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

  5. 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

  6. 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

  7. 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

  8. The Annual Report - 2 • The constitution or legal framework • The URC Acts • Appointment of trustees • Objectives and purpose • Achievements and performance • 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

  9. Size of accounts • Based on greater of income or expenditure • Up to £10,000 • Receipts and payments and assets and liabilities; no independent examination • £10,000 to £100,000 • Receipts and payments and assets and liabilities; independent examination • £100,000 to £250,000 • Accrual accounting, statement of financial activities plus balance sheet; independent examination • Over £250,000 • Accrual accounting, statement of financial activities plus balance sheet; audit • Smaller churches can use accrual accounting; larger churches must use it

  10. Book keeping • Keep it simple • Show all transactions as gross • Keep records for EVERY transaction • Separate funds • Unrestricted • Designated • Restricted • Endowment • Reconcile against bank statements • Take care over cash handling

  11. 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

  12. Assets and liabilities • Must include ALL assets and all accounts • Assets • Cash and bank deposits • Other monetary assets • Loans; tax claims made; unpaid accounts • Investments • Fixed Assets • Buildings; manses; equipment; cars; • Liabilities • Amounts owed but not paid • Special collections not forwarded • Grant commitments • Loans & hire purchase

  13. Accruals accounts • Income and expenditure related to accounting period • Must include • Statement of Financial Activities (SOFA) • Balance sheet • Notes explaining policies & details • Keep funds separated • Endowment, restricted, unrestricted • Show previous year figures for comparison • Not by fund

  14. 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

  15. SOFA 2 • Expenditure • Costs of generating funds • Costs of generating income • Costs of trading • Investment management fees • Charitable activities • M&M • Maintenance of church and manse • Clergy expenses • Charitable donations • Governance costs • Audit/examination costs and legal and professional fees • Other costs

  16. 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

  17. 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

  18. 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 • Cash, bank and deposit accounts, investments, debtors • Liabilities • Creditors due within 1 year • Loans and Long term liabilities • Net assets/liabilities • Funds by type

  19. 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

  20. 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

  21. 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

More Related