New accounting and reporting regulations

Myles McKeown

Charity Commission for Northern Ireland

Annual reporting

Charity annual reporting

Registered charities must report to the Commission annually

Introduced on a phased basis:

Phase 1: interim annual reporting – temporary arrangements apply to charities reporting on a year beginning before 1 Jan 2016.

Phase 2: full annual reporting – permanent requirements in accordance with the accounting and reporting regulations commenced 1 Jan 2016. Will apply to all registered charities.

All charities should apply full annual reporting requirements as they will be required in all subsequent years

Which arrangements must a charity report under?

Accounting and reporting regulations

Commenced 1 January 2016

Apply to all registered charities and set out:

form and content of accounts (receipts & payments or accruals) form and content of trustees’ annual report level of external scrutiny required: ind examination or audit

High level requirements

Income <= £250,000– Can elect to prepare Receipts & Payments accounts– Independent Examination (trustee assured)– Trustees’ Annual Report– Annual Monitoring Return

Income £250,001 to £500,000– Accruals Accounts (SORP)– Can be Independent Examination (must be qualified)– Trustees’ Annual Report– Annual Monitoring Return

Over £500,000– As above but full audit

Current audit requirements for NI charitable companies: Accounts prepared under Companies Act 2006 Audit exemption claimed under Companies (Northern

Ireland) Order 1986

• Watch the governing document requirements!

Full Exemption Partial ExemptionIncome < £90k and Balance

Sheet total < £1.4MIncome < £250k and

Balance Sheet total < £1.4M

No report required Accountant’s Report required

Charitable Companies

Changes to “savings” (audit) exemptions under Companies Act

New Audit and Accounts Requirements:Turnover Accounts Assurance

< £250k SORP Accruals Accounts

Suitable Independent

Person

£250k - £500k SORP Accruals Accounts

Independent Examiner

> £500k SORP Accruals Accounts Audit

Charitable Companies

Guidance available

ARR01 Charity reporting and accounting: guidance summaryARR02 Charity reporting and accounting: the essentialsARR03 Receipts and payments accounts guidanceARR04 Accruals accountsARR05 Annual monitoring return guidanceARR06 Charity reporting: Interim annual reporting arrangementsARR07 Guidance for independent examinersARR08 The trustees’ annual report and public benefit reporting

Receipts and payments accounts toolkit and an example trustees‘ annual report

When do you have to submit?

10 months after the end of first full financial period following registration – will receive 3 reminders

First reporting year requirements1 2 3

Date registered 9 April 2016 18 July 2014 3 Dec 2015

Financial year 1 April - 31 March

1 Jan - 31 December

1 Sept - 30 August

Income £240,000 £1.2 million £540,000Type Unincorporated Trust UnincorporatedInterim / full Full Interim Full

Accounts Receipts and payments

Format currently prepared

Accruals

Reports

Trustees’ annual report and

independent examiner -

trustee assured

Trustees’ annual report and audit

Deadline 31 Jan 2019 31 Oct 2016 30 Jun 2018

Annual monitoring return (AMR)

Annual monitoring return

Tapered and proportionate

Part A: All charities

Part B: £10,000 - £100,000

Part C: £100,000+ (voluntary)

Attach accounts and reports

Annual reporting: lessons learned

Over 20% of first 100 charities which submitted accounts and reports to the Commission failed testing. Reasons included:

Attached inappropriate material within PDF submitted accounts Failure to attach full information Financial statements submitted covering incorrect financial period Draft financial statements submitted Failure to provide income and expenditure figures in annual return Figures in annual return did not match those in the accounts  

What happens next?

What will happen next?

On receipt of the accounts, reports and annual monitoring return the Commission will:

Publish accounts online (register of charities) Assess submitted documents Address all zero tolerance issues Potentially visit a charity

Will publish if the charity fails to submit accounts on time – status on register immediately changed to

‘in default’

Charity reporting – the register

Charity reporting – the register

Charity reporting – the register

Case Studies - Investigations

USPCA- “Long standing” board with no movement- Too much reliance on key staff- Policies & Procedures- Board drove forward change including review- Board identified further problems- Board took action to address

Training Charity- “Long standing” board with no movement- Too much reliance on key staff- Policies & Procedures- Board resigned on commencement of Commission investigation- Commission appointed trustees save charity from closure

Forthcoming matters

International Financial Action Task Force (FATF) inspection

Matters of material significance consultation closed and analysing responses

For more information visit our website www.charitycommissionni.org.uk

Thank you: Any questions?