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Charity Comment Summer 2011

Kath Moss, Charity Consultant

Welcome to the Critchleys Summer 2011 Charity Comment. We have set out below some key changes since our last newsletter together with our comments.

If you have any particular areas that you would like us to cover in future editions then please do not hesitate to contact either myself or one of the other members of the Critchleys charity team

  Tax benefits of legacies to charities

The 2011 budget introduced an interesting proposal that will encourage people to leave legacies to charities in their wills. How will this work? Click here to read more.

  Review of the Charity SORP

The Accounting Standards Board has been reviewing the current SORP under which charity accounts are prepared, with the objective of bringing it in line with International Financial Reporting Standards. There are some contentious issues in current proposals which have been well rehearsed in the national sector press.

We have a prepared very brief summary of the activity to date in the attached article. We suggest that you take some time to contribute to the debate before the consultation closes on 31 July 2011, otherwise the opportunity to influence the shape of financial reporting will have passed.

Our concern is that the proposals will increase the complexity and cost of compliance for a sector which continually faces significant resourcing challenges. We support the need for transparency in reporting but it needs to be proportional and focused on impact. Ironically, the ASB is also running a project on combating clutter in annual reports. Click here for the full article.

  Governance health check

There have been many reports and updates on this topical issue in the current economic climate. Can business failure be attributed to a “head in the sand” mentality and failure to tackle fundamental issues? Charities are not absolved from this challenge.

Updated guidance for the sector was published on the Charity Commission website in October 2010. We have updated the leaflet entitled "Free governance health check” Click here.

  Charities and the abolition of cheques

The UK Payments Council announced in 2009 that cheques would be phased out by October 2018 if alternative payment methods were developed. The Treasury Select Committee has now reopened its inquiry into the abolition of cheques.

The Charity Commission has stated that providing a charity's trustees opt to use the alternative method of payment and have implemented sufficient safeguards over its use then the abolition of cheques should not weaken a charity's system of internal financial controls. For more guidance, please see the Treasury report here.