Don Bawtree: New guidance from the Financial Reporting Council

Plus: fraud in the charity sector

Don Bawtree
Don Bawtree

The Financial Reporting Council has issued two pieces of guidance that might help charities. Firstly, with the year end reporting season approaching, they suggest Nine characteristics of good corporate reporting. Among the tips included in the guidance is about "a single story" – that the narrative in the front-end is consistent with the accounts and explains them so that there are no surprises. The second is how the money is made – the report gives a clear and balanced account of the company’s performance, good and bad, and of the business model.

Further tips include about what worries the board, and that the risks and uncertainties described in the strategic report are genuinely the principal risks and uncertainties that concern the board, and consistency – that key performance indicators are clearly reconciled to the relevant amounts in the accounts and any adjustments are clearly explained.

The guidance also advises to "cut the clutter", where important messages, policies and transactions are highlighted and supported with relevant context and are not obscured by immaterial detail, and to have clarity, ensuring that the language used is precise and explains complex accounting and reporting issues clearly while avoiding jargon.

The guidance also says accounts should summarise, in that items are reported at an appropriate level of aggregation and tables of reconciliation are supported by, and consistent with, the accompanying narrative.
The final two points are to explain change properly and to ensure the accounts are true and fair – the spirit as well as the letter of accounting standards is followed.

The FRC has also written to audit committee chairs raising matters of equal relevance to the charity sector. It highlights the following issues to consider: adequate disclosure of the financial position in the strategic report, accounting judgements and policies; risk reporting – including cyber security; and the impact of Brexit.

One issue they do not mention that affects larger charities is the apprenticeship levy. The key features of the final funding policy for the levy, which comes into force from May 2017, have now been announced. The deadline for using funds in an organisation’s digital account has been extended from 18 months to 24 months, and there is a commitment to making it possible for employers to transfer digital funds to other employers in their supply chains or sector.

Fraud

There has been a focus on fraud recently. The Charity Commission, in collaboration the Charity Sector Counter Fraud Group, has launched a new website to help charities fight fraud. It provides an initial point of reference for trustees, staff and volunteers who want to find out more about tackling fraud in their charity. Here are their top tips to reduce a charity’s vulnerability to fraud include a strong counter fraud culture, robust financial controls, encouragement for staff to voice concerns, a fraud response plan, and reporting serious incidents promptly.

The Charity Commission is also consulting on when charities should report a serious incident, most of which result in financial loss. Suggested changes to existing guidance include encouraging reporting as soon as possible, an updated section to help with multiple reporting for larger charities, removing the need to report where the relevant information is in the annual return, and adding some new types of incidents.

With this emphasis on fraud, it is rather alarming to note that research from YouGov shows that most of us – 74 per cent – are what is known as micro criminals. Typical micro crimes are taking a plastic bag without paying, illegally streaming media, paying in cash knowing the recipient won’t pay tax, and not paying public transport fares. As less than 3 per cent of the UK workforce are in the charity sector, it is to be hoped that it is micro-criminal free.

Have you registered with us yet?

Register now to enjoy more articles and free email bulletins

Register
Already registered?
Sign in

Before commenting please read our rules for commenting on articles.

If you see a comment you find offensive, you can flag it as inappropriate. In the top right-hand corner of an individual comment, you will see 'flag as inappropriate'. Clicking this prompts us to review the comment. For further information see our rules for commenting on articles.

comments powered by Disqus
Follow us on:
  • Facebook
  • LinkedIn
  • Twitter
  • Google +

Latest Jobs

RSS Feed

Third Sector Insight

Sponsored webcasts, surveys and expert reports from Third Sector partners

Markel

Expert Hub

Insurance advice from Markel

Managing data protection for your charity

With the increasing number of data breaches in the UK, it is crucial that your charity manages data protection effectively.

Third Sector Logo

Get our bulletins. Read more articles. Join a growing community of Third Sector professionals

Register now