Most Charity Finance Group members oppose publishing names of top charity earners

In response to a draft Statement of Recommended Practice, Jane Tully, head of policy at the CFG, says charities should explain clearly what they do and why they do it

Jane Tully
Jane Tully

The Charity Finance Group has said it does not support proposals that larger charities should disclose more information about their highest earners in their accounts.

In its response to a consultation on a draft revised Statement of Recommended Practice for charities, the CFG says: "Our members largely support the current threshold of £60,000 and bands of £10,000 for more detailed disclosures on pay. We would recommend maintaining this approach."

A consultation into an "exposure draft" of the Sorp was launched in July by the Sorp committee, led by representatives from the Charity Commission and the Office of the Scottish Charity Regulator.

The new Sorp acts as the principal document to guide charities on how they prepare their accounts, and interprets a new financial reporting standard, FRS 102, which has been prepared by the Financial Reporting Council, and will cover all accounting periods starting on or after 1 January 2015. All company charities and all charities with incomes over a threshold of £250,000 will be required to follow the Sorp.

Rui Domingues, chair of CFG’s technical accounting forum and director of finance and ICT at Friends of the Elderly, said: "The consultation put a number of potential new disclosures out for discussion. Ideas included disclosing the job title and salary for the highest earner in the charity, something many do already.

"It’s important that charities are transparent on expenditure, but it is critical that such disclosures are not put in place as a knee-jerk reaction and are researched so as to ensure genuine improvements in decision-making and transparency.

"We have suggested strengthening current requirements to disclose the numbers of staff within income bands, and explaining the remuneration policy in the annual report in order to improve understanding of staff costs."

In its response, the CFG says the Sorp should be made more accessible to small charities. It proposes introducing a clearer definition of the term "small charity" and moving explanatory modules to the front of the document.

It also supports proposals that the Sorp should allow smaller company charities to use a simpler standard, the Financial Reporting Standard for Smaller Entities, which will operate alongside FRS 102.

FRS 102 will apply to all organisations over the company audit threshold of £6.5m of annual income. Below that level, organisations will have the right to follow the FRSSE, an older standard that the FRC is likely to replace shortly.

The CFG says in its response that because company charities are required to follow the Sorp, it is important that the Sorp allows smaller charities to use the rules laid out in the FRSSE.

Jane Tully, head of policy at the CFG, said: "We want charities to explain in simple and non-bureaucratic terms what they do, why they do it and what they have achieved, providing context to the accounts; the Sorp should be an enabler for this.

"We think that the new, easier-to-use format does mostly achieve this. CFG, however, has proposed changes on legacies, performance reporting and salary disclosures."

"It’s important these are implemented to ensure that charities are disclosing information that is truly useful to the user of the accounts. With charity regulation and accountability under the spotlight, it’s essential that the reporting framework for charities is fit for purpose."

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