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TEMPLATE FOR ANNUAL REPORT

AND FINANCIAL STATEMENTS

FOR LARGE-SIZED ORGANISATIONS

GUIDELINES FOR ANNUAL REPORTSAND FINANCIAL STATEMENTS FORNON-GOVERNMENTAL ORGANISATIONSUPDATED JUNE 2013


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Dchas T. +353 1 405 3801 F. +353 1 405 3802 A. Dchas 12 Harcourt Street, Dublin 2, Ireland W. www.dochas.ie Dchas 20112


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GUIDELINES FOR ANNUAL REPORTS

AND FINANCIAL STATEMENT FOR

NON-GOVERNMENTAL ORGANISATIONSUPDATED JUNE 2013

Dchas is committed tomaximising the impact andquality of its members work.In this context it promotesNGO cooperation, sharedlearning and the application ofshared standards of practice.Dchas members endeavourto adhere to the Irish

Development NGOs Code ofCorporate Governance and tothe Charities SORP standardof financial accounting.

1. INTRODUCTIONDchas members strive to apply human rights standards in

their work. Such standards are based on three key principles of

accountability:

H Participation: ensuring all those who are affected are involved indecision-making

H Transparency: disclosing information relating to governance, financesand performance

H Standards: articulating and adhering to professional standards ofconduct and performance

This document contains the three separate updated reporting templates,each relating to a particular size of organisation, measured by its annualincome. Each reporting template has the common purpose of guidingeach member organisation in respect of how it should report on its annualperformance

These reporting templates are structured by Dchas to meet the

following imperatives:

1.1 OVERALL APPROACH TO ACCOUNTABILITY, QUALITY AND IMPACT

The most effective NGOs are those that work to their strengths, and areable to mobilise the skills of the people that they serve. Their impact islinked to their responsiveness to peoples needs, and it is the strengthof their bonds with all those affected by, or interested in their work thatmatters, rather than their scale of operation.

Development cooperation is based on such trust, and it must extend inall directions. This means within the members own organisation, withits volunteers and supporters, and between the member organisation

and its beneficiaries and local development partners. It must also existbetween the member organisation and its institutional donors, as well aswith the providers of donations and private grants. All donors, whethergovernments, institutional agencies, companies, or individuals, must haveconfidence that the money given is used appropriately and effectively.

Beneficiaries and local development partners must have confidence inthe support being provided by the member organisation. They must beencouraged and helped to give feedback to the member organisationwhere they feel such support is not working, and need to experience thatsuch feedback is acted upon properly.


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The member organisation must be able to demonstrate that its ownprinciples of accountability are migrated into the local developmentpartners, particularly when operating in a jurisdiction with a corruptionreputation. What this means for the member organisation is that it mustbe accountable for its own affairs, while also setting parallel standards ofaccountability for the wider development sector.

Dchas members are proud of their diversity, aware that, as civil

society organisations, Irish NGOs come in all shapes and sizes.

They choose to act in different ways, reflecting the different interests oftheir supporters and their core values, and dealing with different standardsof regulation. However, they are bound by a shared commitment to long-lasting improvements in the lives of the people for whom they are working.These factors make accountability difficult to determine and even harder toimpose on such development organisations. Donors dealing with fundingapplications from this diverse group of NGOs need to know that theorganisations are committed to best practice in the areas of accountability,quality and impact.

Dchas members subscribe to the Istanbul Principles for

Development Effectiveness,and are committed to improving

transparency and being fully accountable for their actions. Availing of thesupport of Dchas and other organisations, they have set professionalstandards for their work, applying codes of conduct and governance todemonstrate that the sector is self-regulating. Out of this self-regulatoryapproach, Dchas has developed a set of core principles of accountability,quality and impact, as well as other policies and practices.

This particular evolution of reporting templates is a working example ofhow Dchas is supporting its member organisations to apply The Codeof Corporate Governance in tandem with interpreting how best to applyCharities SORP requirements.

1.2 THE IMPORTANCE OF GOVERNANCEBy applying The Code of Corporate Governance, each memberorganisation is developing good internal structures along corporateprofessional lines, in order to be able to hold itself accountable from within,to offer transparency to its stakeholders, and to operate more effectively.

Underpinning all of thisis trust. Trust can onlybe established andmaintained if there is anappropriate accountabilitymind-set in each memberorganisation involved indevelopment cooperation.


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Dchas is encouragingeach member organisationto use its Annual Reportand Financial Statementsas a means of enhancingtransparency and publicaccountability.

1.3 TRANSPARENCY AND PUBLIC ACCOUNTABILITY

Dchas is encouraging each member organisation to use its Annual Reportand Financial Statements as a means of enhancing transparency andpublic accountability. This is a good practice in terms of preparing for therequirements of the International Aid Transparency Initiatives (IATI).

1.4 UPDATED REPORTING TEMPLATES AS A SELF-REGULATORY FACILITY

In the absence of a functioning Irish Charity Regulator and the non-

mandatory nature in Ireland of Charities SORP compliance, thesetemplates provide a degree of clarity to member organisations and tostatutory auditors alike. This helps the sector to effect self-regulation. Thetemplates have the added value that they have seamlessly integrated therequirements of Charities SORP and The Code of Corporate Governanceinto one complete guidance document. This is of critical importance as theprovisions of Charities SORP and The Code of Corporate Governanceoverlap extensively.

1.5 BOARD OVERSIGHT

The templates are a practical usable tool that can enable boards to exercisetheir oversight role and to report accordingly on how they are followinggood practice in relation to risks, liquidity and results management, in thelight of The Code of Corporate Governance.


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GUIDELINES FOR ANNUAL

REPORTS AND FINANCIAL

STATEMENTS

FOR SMALL SIZED NGOsUPDATED JUNE 2013


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SMALL SIZED NGOsUPDATED JUNE 2013

H The notes to the Financial Statements should include additional detailsof the incoming resources depicted in SOFA. These details should makeit possible to readily identify the costs incurred in securing each categoryof incoming resources, and the net income secured from fundraisingactivities. In addition, organisations in receipt of Irish Aid funding mustavail of the notes to the Financial Statements to detail the extent ofsuch support, contract by contract. In the same manner the notes tothe Financial Statements should include details of the component costsof individual programmes, and the other notes required by CharitiesSORP to back up the balance of items in SOFA and the Balance Sheet.

Of particular importance is a clear note that tracks the movements inindividual restricted funds. Consideration should also be given to theinclusion of other SORP disclosure requirements.

DIRECTORS REPORT

ACTIVITIES UNDERTAKEN, RESULTS ACHIEVED, LESSONS LEARNED ANDFUTURE PLANS

H The Directors Report should include details of the programme andother activities that had been planned in advance for the year nowended, with information on the results for this year and an outline ofthe circumstances that facilitated or impeded the planned activity.Fundraising should be so reported on as an activity, and there should beparticular emphasis on reporting the net outcome of fundraising efforts.There should be a note on the lessons learned as a result of dealing withprogramme difficulties, and on how these lessons are informing futureprogramme approaches. There should be a follow-on note setting outwhat activities are planned for the succeeding year. The directors shouldbriefly report here on the systems in place for planning, managing andtracking of programmes. The Directors Report should state clearly whatinitiatives the board has developed in the past year, particularly in the

areas of compliance with sectoral codes of practice and other initiativesranging from improving the website, securing new income streams,raising the public profile of the organisation, to acquiring new facilities.

H Typically, this report on these aspects should be not less than twopages, and thereafter with as many pages as necessary to properlyinform the principal stakeholders.

H The Dchas Code of Conduct on Images and Messages requires thatDchas members communicate our commitment to best practice inthe communication of images and messages in all our public policystatements.

The Dchas Code of Conducton Images and Messagesrequires that Dchasmembers communicate ourcommitment to best practicein the communication ofimages and messages in allour public policy statements.


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GOVERNANCE

H The Directors Report should include a section on governance todemonstrate that the board is properly governing the organisation. Thissection should describe the division of responsibility between the boardand the organisations management, and include the responsibilitiesthat the board reserves to itself and does not delegate to management.It should set out how the board oversees the strategic direction ofthe organisation and the steps the board takes to ensure that theorganisation is setting and reaching targets, confirming that it is signing

off on annual plans and budgets, and is reviewing the outcomes of thestatutory audit.

H The Directors Report on governance should also demonstrate how theboard delegates responsibility to board committees, and explain thesteps it takes to supervise such delegations. The core issue here is todemonstrate that the board is proactively overseeing the affairs of theorganisation. The Report should mention the number of members ofthe board. It should refer to mechanisms for internal stakeholders (e.g.organisation members) and employees to provide recommendations ordirections to the highest governance body.

H All Dchas members must state in their annual accounts that theysubscribe to the principles contained in The Code of CorporateGovernance, and where relevant describe where their governancepractices deviated from the Code.

RISKS

H The Directors Report should briefly describe the steps taken by theboard to identify the principal risks facing the organisation. It shouldstate what approach is taken to identify and assess risks, and describewhat risk management arrangements have been put in place, including

systems of monitoring and control, to ensure critical risks are avoided ortheir impact mitigated.

H There should be a degree of formality about this process and a simplerisk register should be maintained and utilised by the board for regularboard reviews.

H The Company Secretary should table one specific risk element fordiscussion at each meeting of the boards Finance and Audit Committee,so that over time the main risks get this level of attention.

H The board at each meeting should consider the outcomes of thisCommittees deliberations.

All Dchas members muststate in their annual accountsthat they subscribe to theprinciples contained inThe Code of CorporateGovernance, and whererelevant describe wheretheir governance practicesdeviated from the Code.


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RESERVES

H The Directors Report should contain a short report on the boardsapproach to managing the organisations reserves.

H At a very minimum, an organisation should have a reserves policy, andthe board should report each year in the Directors Report on the statusof the organisations reserves, and how these match up with reservespolicy.

H There should be particular emphasis on the boards strategy in relation

to designated reserves, particularly that element of unrestricted reservesthat is aspired to so that the organisation could continue operations foran extended period in the event of a significant setback affecting coreincome.

H There should also be a note on what other purposes are determined forthe balance of the designated reserves, and an explanation of the policyregarding general reserves.

H The core issue here is the extent to which the board concerns itselfwith managing its unrestricted reserves, and this is most critical wherefunding is received from institutions such as Irish Aid, and which is

conditional on a specified level of self-financing either from currentunrestricted income, or from available unrestricted reserves. The reporton reserves should explain the linkages between identified risks anddesignated reserves.


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GUIDELINES FOR

ANNUAL REPORTS AND

FINANCIAL STATEMENTS

FOR MEDIUM SIZED NGOsUPDATED JUNE 2013


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MEDIUM SIZED NGOsUPDATED JUNE 2013

Dchas recommends that Medium sized Non Governmental

Organisations (i.e. those with income between 1m and 3m per

annum) use the following format when completing their Annual

Report and Financial Statements. In this document, Dchas sets out

recommended minimum standards of reporting for medium-sized

organisations wishing to adhere to these standards.


H For all member organisations adopting Charities SORP it is necessaryto state in the Financial Statements if these statements have beenprepared in accordance with Charities SORP. Where there is anyinstance of departure from Charities SORP, these statements mustcontain a disclosure setting out the circumstances of the departure (ref.FRS 18). Among the other disclosure obligations of Charities SORP,emphasised in The Code of Corporate Governance, is the requirementin the notes to the Financial Statements to disclose the income bands forsenior managers.

H Irish charity companies require a Statement of Financial Activities(SOFA), rather than an Income & Expenditure Statement. The

SOFA should be in columnar form to distinguish between restrictedand unrestricted income, and between expenditure attributable torestricted income, and expenditure attributable to unrestricted income.The incoming resources subheading, and the outgoing resourcessubheadings, as specified in Charities SORP, should be utilised.

H The Balance Sheet should follow the Charities SORP format, particularlyin respect of distinguishing between restricted and unrestricted reserves.

H Irish NGOs that are companies must prepare Cash Flow Statements asrequired by Irish company law and Charities SORP.

H Dchas members are required to clearly show their Total DomesticallyGenerated Voluntary Income in the Incoming Resources section of theirAudited Accounts.

H The notes to the Financial Statements should include additional detailsof the incoming resources depicted in SOFA. In the same mannerthese notes should include details of the component costs of individualprogrammes, and the other notes required by Charities SORP toback up the balance of items in SOFA and the Balance Sheet. Thesedetails should make it possible to readily identify the costs incurred insecuring each category of incoming resources. In addition, organisationsin receipt of Irish Aid funding must avail of the notes to the Financial

Dchas is committed tomaximising the impact andquality of its members work.In this context it promotesNGO cooperation, sharedlearning and the application ofshared standards of practice.Dchas members endeavourto adhere to The Code of

Corporate Governance and toCharities SORP standards offinancial accounting.


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Statements to detail the extent of such support, contract by contract.Of particular importance is a clear note that tracks the movements inindividual restricted funds.

H Consideration should also be given to the inclusion of other SORPdisclosure requirements.

DIRECTORS REPORT


H The Directors Report should generally provide a good level of detailof the activities that had been planned for the year now ended, withinformation on the results for that year, and reasonably extensiveinformation on circumstances that facilitated or impeded the plannedactivity. There should be a detailed note on the lessons learned as aresult of dealing with programme difficulties, and on how these lessonsare informing future programme approaches. The Report should providea good picture of what activities were planned for the succeedingyear, generally with each activity or programme being highlighted. The

organisation should report here on the systems in place for planning,managing and tracking of programmes.

H The information on these aspects should be extensive enough to informthe principal stakeholders. The report should include a review of financialperformance, covering income achievements and the nature and costeffectiveness of fundraising efforts, and a review of the programmesthat absorbed the bulk of the resources expended. There should be aperformance summary using key performance indicators.

H The Directors Report should state clearly what initiatives the board hasdeveloped in the past year, particularly in the areas of compliance with

sectoral codes of practice and other initiatives ranging from improvingthe website, securing new income streams, raising the public profile ofthe organisation, to acquiring new facilities.

H Larger organisations in this category should include information aboutthe organisations performance over recent years in terms of maximisingthe amount of income that translates into programme expenditure.

H The Dchas Code of Conduct on Images and Messages requires thatDchas members communicate our commitment to best practice inthe communication of images and messages in all our public policystatements.



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GOVERNANCE

H The Directors Report should include a section on governance,which sets out how the board oversees the strategic direction ofthe organisation and the steps the board takes to ensure that theorganisation is setting and reaching its targets, it is signing off on annualplans and budgets, and is reviewing the outcomes of the statutory audit.

H The Directors Report should describe the division of responsibilitybetween the board and the organisations management, anddemonstrate how the board delegates responsibility to boardcommittees (including finance and audit committees), and explain thesteps the board takes to supervise such delegations. The functions ofboard committees should be defined and explained in the DirectorsReport or in a referenced generic document that can be readilyaccessed by stakeholders. The Report should mention the numberof members of the board. It should refer to mechanisms for internalstakeholders (e.g. organisation members) and employees to providerecommendations or directions to the highest governance body.

H The Directors Report should explain how the board has adopted TheCode of Corporate Governance, to the extent warranted by the scale of

the organisations operations, the nature of activities, and the informationrequirements of stakeholders. The Report should describe where theorganisations governing practices deviated from the Code.

H The Directors Report should set out what the board does in terms ofselecting and inducting its directors, and how it takes steps to equipthe directors to function properly as board members. If the DirectorsReport fails to outline the boards governance approach, it means thatstakeholders are unable to ascertain if the board is properly governingthe organisation. If the organisation is in receipt of significant state andinstitutional funding, it must demonstrate in the governance statementthat the faith placed in the organisation by such funders is well founded

and that the board is controlling everything with a strong hand.

RISKS

H The Directors Report should describe the steps taken by the board toidentify the principal risks facing the organisation. It should state whatapproach is taken to identify and assess risks, and describe what riskmanagement arrangements have been put in place, including internalprocesses and systems of monitoring and control.

H There should be a degree of formality about this process and a

comprehensive risk register should be maintained and utilised by theboard for regular board reviews.


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H The Company Secretary should table one high-rated risk element fromthe risk register for discussion at each meeting of the boards Financeand Audit Committee, so that over time the main risks get this level ofattention.

H The board at each meeting should determine what actions are necessaryas a result of the Committees deliberations.

RESERVES

H The Directors Report should contain a report on the boards approachto managing the organisations reserves.

H The Directors Report should be quite specific regarding how theunrestricted reserves are overseen by the board.

H The board should report each year in the Directors Report on the statusof the organisations reserves, and how these match up with an explicitlyformulated reserves policy.

H There should be particular emphasis on the boards strategy in relationto designated reserves, particularly that element of unrestricted reservesthat is aspired to so that the organisation could continue operations foran extended period in the event of a significant setback affecting coreincome.

H There should also be a note on what other purposes are determined forthe balance of the designated reserves, and an explanation of the policyregarding general reserves.

H The core issue here is the extent to which the board concerns itselfwith managing its unrestricted reserves, and this is most criticalwhere funding is received from institutions such as Irish Aid, andwhich is conditional on a specified level of self-financing either fromcurrent unrestricted income, or from available unrestricted reserves. Indetermining the purposes for components of the designated reserves,there should be an explanation of how these designations have beeninfluenced by the highest rated risks identified by the risk assessmentprocess.

The core issue here is theextent to which the boardconcerns itself with managingits unrestricted reserves, andthis is most critical wherefunding is received frominstitutions such as IrishAid, and which is conditionalon a specified level of self-

financing either from currentunrestricted income, orfrom available unrestrictedreserves.


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GUIDELINES FOR ANNUAL

REPORTS AND FINANCIAL

STATEMENTS

FOR LARGE SIZED NGOsUPDATED JUNE 2013


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LARGE SIZED NGOsUPDATED JUNE 2013

Dchas recommends that Large sized Non Governmental

Organisations (i.e. those with income between 3m and 10m per

annum) use the following format when completing their Annual

Report and Financial Statements. In this document, Dchas sets out

recommended minimum standards for large-sized NGOs, wishing to

adhere to these standards.


H For all member organisations adopting Charities SORP, it is necessaryto state in the Financial Statements if these statements have beenprepared in accordance with Charities SORP. Where there is anyinstance of departure from Charities SORP, these statements mustcontain a disclosure setting out the circumstances of the departure(ref. FRS 18). Among the other disclosure obligations of CharitiesSORP, emphasised in The Code of Corporate Governance, is therequirement in the notes to the Financial Statements to disclose theincome bands for senior managers.

H Irish charity companies require a Statement of Financial Activities(SOFA), rather than an Income & Expenditure Statement. The

SOFA should be in columnar form to distinguish between restrictedand unrestricted income, and between expenditure attributableto restricted income, and expenditure attributable to unrestrictedincome. The incoming resources subheading, and the outgoingresources subheadings, as specified in Charities SORP, should beutilised. Because of their scale and complexities these organisationswill be able to fully exploit the components of SOFA. In some casesorganisations will find that the incoming resources and expendituresub-headings in SOFA may not adequately allow identification ofall categories of income and expenditure, and in such cases theorganisation will avail of the notes to the Financial Statements to

elaborate on these details

H The Balance Sheet should follow the Charities SORP format,particularly in respect of distinguishing between restricted andunrestricted reserves. The amount of detail in the Balance Sheet inrespect of reserves will be quite significant, reflecting the complex trailof income and expenditure that impacts on the reporting of year-endreserves.

H Irish NGOs that are companies must prepare a Cash Flow Statementas required by Irish Company law and Charities SORP.

Dchas is committed tomaximising the impact andquality of its members work.In this context it promotesNGO cooperation, sharedlearning and the application ofshared standards of practice.Dchas members endeavourto adhere to The Code of

Corporate Governance and toCharities SORP standards offinancial accounting.


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H Dchas members are required to clearly show their Total DomesticallyGenerated Voluntary Income in the Incoming Resources section of theirAudited Accounts.

H The notes to the Financial Statements should include additional detailsof the incoming resources depicted in SOFA. In the same mannerthese notes should include details of the component costs of individualprogrammes, and the other notes required by Charity SORP to backup the balance of items in SOFA and the Balance Sheet. These detailsshould make it possible to readily identify the costs incurred in securing

each category of incoming resources. In addition, organisations inreceipt of Irish Aid funding must avail of the notes to the FinancialStatements to detail the extent of such support, contract by contract.Of particular importance is a clear note that tracks the movements inindividual restricted funds.

H Consideration should also be given to the inclusion of other SORPdisclosure requirements.

DIRECTORS REPORT


H Most of the organisations in this category have a big story to tell aboutprogramme planning and results. The Directors Report should providea good level of detail of the activities that had been planned for theyear now ended, with information on the results for that year, and quiteextensive information on circumstances that facilitated or impeded theplanned activity. Where possible such circumstances should be wellillustrated. There should be a detailed note on the lessons learned as aresult of dealing with programme difficulties, and on how these lessons

are informing future programme approaches. The Report should providea good picture of what activities were planned for the succeedingyear, generally with each activity or programme being highlighted. Theorganisation should report here on the systems in place for planning,managing and tracking of programmes. All of this should be describedwithin the wider context of the organisations longer term strategicplanning, which underpins the annual plans and performance.


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H The information on these aspects should be extensive enough toinform stakeholders and acknowledge the contributions of the principalstakeholders. When reporting on completed activities, the directorsshould provide a review of the financial performance aspects, includingincome achievements and associated difficulties. There should be areport on the impact of the programmes and other activities, supportedby a graphical summation of the outlays. In all cases this review shouldinclude a set of key performance indicators that demonstrate, forexample, the cost efficiency of fundraising and overhead spend, andthe co-funding ratios in respect of grant-aided programmes. Such key

performance ratios should also be employed in-house and imbedded intomanagement accounting reports to the board.

H The Directors Report should state clearly what initiatives the board hasdeveloped in the past year, particularly in the areas of compliance withsectoral codes of practice and other initiatives ranging from improvingthe website, securing new income streams, raising the public profile ofthe organisation, to acquiring new facilities.

H The Dchas Code of Conduct on Images and Messages requires thatDchas members communicate our commitment to best practice inthe communication of images and messages in all our public policy

statements.

GOVERNANCE

H The Directors Report should include a section on governance, settingout how the board oversees the strategic direction of the organisation,and the steps the board takes to ensure that the organisation is settingand reaching its targets, that it is signing off on annual plans andbudgets, and is reviewing the outcomes of the statutory audit.

H Given the greater complexity of these organisations, the DirectorsReport should clearly state what authority is specifically reserved tothe board and not delegated to management, over and above thematters normally reserved to the board. Such exceptional matters wouldinclude acquisition and disposals of property, integration with anotherorganisation, and use of financial instruments.

H The Directors Report should describe the division of responsibilitiesbetween the board and the organisations management, anddemonstrate how the board delegates responsibility to boardcommittees (including finance and audit committees), and explain thesteps the board takes to supervise such delegations.



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H The balance of critical risks are often much less visible, and by theirnature occur without fanfare and at the most inconvenient times. TheDirectors Report for any such organisation should therefore describecarefully the steps taken by the board to identify such risks facing theorganisation. It should state what approach is taken to assess theserisks and install risk management arrangements. The latter should includesystems of monitoring and control, to ensure critical risks are avoidedor their impact mitigated. Particular emphasis should be placed on risksthat could impact on the communities or individuals that the organisationis working with, as well as risks to staff, and reputational risks that could

damage the capacity of the organisation to continue in operation.

H There should be a high degree of formality about this process and acomprehensive risk register should be maintained and utilised by theboard for regular board reviews of risks.

H The board must demonstrate that it conducts a periodic and formalreview of risk exposures, using a formal methodology.

H The Directors Report should specify that the initiatives taken bythe board (or delegated by the board to board committees, orto management) to mitigate or control identified significant risks

are imbedded into the internal processes and procedures of theorganisation, and are a recurring theme at board meetings and atmeetings between the Chairperson of the board and the seniormanagement.

RESERVES

H In the case of most of the organisations in this category, reserves area core dimension of the balance sheet. The unrestricted reserves needto be analysed into a set of designated reserves appropriate to theneeds and challenges of the organisation, other than those unrestrictedreserves to be regarded as general reserves.

H The designated reserves should particularly provide a cushion to allowthe organisation to survive any sudden and significant interruption inincome flow, capable of tiding the organisation over for at least threemonths.

H There should also be a note on what other purposes are determined forthe balance of the designated reserves, and an explanation of the policyregarding general reserves, as some of the latter may be completelyilliquid, being invested in assets and working capital.

There should be a highdegree of formality about thisprocess and a comprehensiverisk register should bemaintained and utilised bythe board for regular boardreviews of risks.


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APPENDIX 1

A NOTE ON CHARITIES SORPSORP, the Statement of Recommended Practice, Accounting andReporting by Charities (2005) was developed, in accordance withAccounting Standards Board guidelines, by the Charity Commissionfor England and Wales, and by the Scottish Regulator. While CharitiesSORP has no jurisdiction outside UK, most Irish charity companies havevoluntarily adopted it in order to follow respected practice in relation toaccounting and reporting, and most particularly to satisfy their stakeholdersin this regard. The Accounting Standards Board remains satisfied thatCharities SORP does not conflict with accounting standards or with currentaccounting practices.

Adopting Charities SORP voluntarily is prudent for Dchas memberorganisations because it provides a best practice approach in respect ofaccounting and reporting. Member organisations generally have criticalstakeholders who are expecting this level of accounting and reporting as aprerequisite of remaining in such a stakeholder relationship.

For Dchas members, therefore, it is an issue of determining the extent towhich it should comply with Charities SORP standards. This judgment restswith the directors as constituting the board, which must determine howmuch of Charities SORP is appropriate and warranted in respect of theaccounting approach, and the subsequent annual financial statements andannual report.

Adopting Charities SORPvoluntarily is prudent forDchas member organisationsbecause it provides a bestpractice approach in respectof accounting and reporting.


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APPENDIX 1

In general terms Charities SORP requires, inter alia, the following in thefinancial statements and annual report:

H The Financial Statements (and particularly the Statement of FinancialActivities) to be presented in a specified layout that distinguishes, forexample, between specific categories of income and specific categoriesof expenditure

H Details of the objectives, aims, strategy and major activities undertakenby the entity

H Reports on achievements and performance in an informative andmeaningful manner, pertinent to the affairs of the specific memberorganisation

H A statement of directors responsibilities regarding the financialstatements, in compliance with accounting practices

H A clear statement and details of the organisations reserves policy

H A risk management statement, outlining what the board has undertakenin respect of identifying and understanding its risks, what steps havebeen put in place to quantify and rank risks, and what initiatives

are imbedded at board level to oversee the most highly-ranked riskexposures.


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APPENDIX 2

THE CODE OF CORPORATE GOVERNANCEThe second guidance document in determining appropriate informationand content in the financial statements and annual report is the IrishDevelopment NGOs Code of Corporate Governance (The Code ofCorporate Governance), which Dchas co-authored in 2009 in conjunctionwith the Corporate Governance Association of Ireland (CGAI). The Codeof Corporate Governance was developed to help each Dchas memberto determine an appropriate approach to its governance obligations. Theexistence of this Code is invaluable to NGDOs, releasing them from thenecessity that would otherwise exist to interpret the Combined Code onCorporate Governance, which is primarily directed at the boards of publiclisted companies, and which would be an excessively cumbersome tool formost NGDOs to interpret and to apply appropriate elements.

Members of Dchas are encouraged by Dchas to adapt The Code ofCorporate Governance to their specific circumstances. The Code requireseach organisation to adopt the principles contained in this Code, suchadoption to be at the discretion of the boards of the entity, regarding whatelements of the Code are appropriate to the scale, nature of activities ofthe entity, and the requirements of its stakeholders. The Code stipulates

that the organisations board must state, in its financial statements andannual report, the nature and extent of such adoption. The Code permits anorganisation to determine the appropriate degree of adoption, explaining inthe annual financial statements and annual report the extent of adoption andnon-adoption, using the principle of comply or explain.

The Code of Corporate Governance is about requiring the board todemonstrate (through its stewardship and in its annual reporting) how wellthe entity is governed, and consequently the annual report should, inter alia,detail:

H How the organisation operates

H How it is held accountable

H The circumstances determining the extent of adoption or non-adoptionof The Code of Corporate Governance by the directors, given that theCode is not mandatory in Ireland

H How the entity is led and controlled by the board

The Code of CorporateGovernance is about requiringthe board to demonstrate(through its stewardship andin its annual reporting) howwell the entity is governed


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APPENDIX 2

H The boards collective responsibility for performance, for solvency and formeeting its obligations

H The boards specific reserved responsibilities

H The boards arrangements for its own periodic review and for renewingthe boards directors

H How the board has delegated its responsibilities to its CEO, to itscommittees, and to its volunteers where appropriate, clearly showinghow the board oversees all such delegations

H How the board and directors integrity is overseen

H How the company meets its obligations to be open to all itsstakeholders.


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Every effort has been made to ensure that this document complies with

the NCBI Clear Print Guidelines. Should you encounter a difficulty inaccessing this publication please inform Dchas at [email protected]

as we will be continuing to work to improve our documentation.


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