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PCC Treasurer’s Roadshow
December 2015
SORP 2015Pension Auto-enrolment
Registered Charity Update
Bath 3 DecTaunton 7 DecWells 8 Dec
Roadshow outline
Introduction
SORP 2015
Pension Auto enrolment
Registered Charities Update
Charity SORP update
Ed Marsh ACA DChAHead of Charity ServicesBurton Sweet
Burton Sweet■Charity specialists since
1995■Over 170 clients (half are
Christian charities and churches)
■ In-house charity legal, constitutional and governance services
The Charities SORP
■Underpinned by UK accounting standards
■Designed to meet the unique needs of charity accountability and reporting
■Who has to follow the SORP?
Distinctives of Charity reporting
■ Which church achieved more?■Church 1: Tithes and offerings of £300,000;
expenditure on church activities of £280,000;■Church 2: Tithes and offerings of £100,000;
expenditure on church activities of £100,000.
■ Numbers are not enough!■ “We leave the accounts stuff to the Treasurer”
Basis of preparation
■Charities must prepare accounts on accruals basis if they are companies or if they have income greater than £250,000.
■ If eligible, can prepare receipts and payments accounts (little guidance given)
Accruals basis
■ Must follow the Charities Statement of ‘Recommended’ Practice;
■ Always consist of:
■Statement of Financial Activities (SoFA);■Balance sheet;■Detailed notes and disclosures;■Trustees’ Annual report
■ Expected to show ‘a true and fair view’.
Receipts and Payments basis■ No statutory format (and not covered by SORP)■ Usually consist of:
■Receipts and Payments Account▪ records cash movements only
■Statement of assets and liabilities■Trustees Annual report still required (using small
entity requirements of SORP)■ Not expected to show ‘a true and fair view’.■ Are they helpful?
Why did we need a new SORP?
■Overdue in the 3-5 year update cycle
■New accounting standards for all from 1 January 2015
■FRS102 based on international standards, bringing everything together
Charities SORP■ SORP 2005
■Previously in force
■ SORPs 2015 (FRSSE or FRS102)■For accounting periods beginning on or after 1
January 2015
■ SORP 2016 (FRS102) with some small charity exemptions■For accounting periods beginning on ■or after 1 January 2016
In a tizzy about the FRSSE?
■FRS102 v FRSSE
■Changes for everyone, some differences in disclosure and some accounting treatment changes (fewer for FRSSE)
■Do you have a choice for 2015? Yes (as do 98% of the charity sector)
Cash Flow statement
■Optional under FRSSE
■# Mandatory under FRS102 (2015)
■FRS102 (2016) – only mandatory for charities with income greater than £500,000
Summary of key changes
■Key changes for everyone
■# = changes relevant only to FRS102 SORP adopters
Trustees’ report
■ In short, the trustees’ annual report…■ Explains what the church is trying to do and how it is
going about it;■ States whether the church has achieved its objectives
in the year;■ Explains plans for the future;■ Explains the church’s governance and management
structure
Trustees’ report (key changes)
■“Fair, balanced and understandable review”■Review of any Going Concern ‘uncertainties’
Trustees’ report (charities with income > £500k)
■Disclosure of principal risks and uncertainties and how handled (rather than previous risk management statement)
■Financial effect of significant events
■Social investment policies
■Arrangements for setting pay of key management personnel
Reserves policy
■“must explain any policy… …for holding reserves and state the amount of those reserves and why they are held…”
■Best practice 7 bullet point checklist
Example of insufficient disclosure:
“Unrestricted funds are held in the General fund in case of a sudden fall in donations.The level of funds is regularly reviewed and is taken into account during the budgeting process”
Statement of Financial Activities
■ ‘Plain English’ headings
■Governance costs relegated to notes
■# Investment gains and losses form part of income and expenditure
■# Comparatives for each fund
Income (and Endowments) fromDonations and legacies (donations, legacies,
some grants, gift aid relief from HMRC, Gifts in kind)
Charitable activities (e.g. Fee charges, admissions)
Other trading activities (e.g. charity shops, rent of premises)
Investments (e.g. bank interest, dividend income, charitable loan interest, NOT gains)
Other Income (e.g. profit on disposal, insurance payout)
Expenditure on:Raising Funds e.g.
• Fundraising activities/events/appeals• Non-charitable trading• Charity shop costs (where shop exists principally to raise
funds)• Finance costs (e.g. overdraft/loan)• Investment management costs• Allocated support costs
Charitable activities (with allocated support costs, including governance costs)Other expenditure
Recognition of income
■FRSSE SORP doesn’t deal with non-exchange income (gift) recognition so points to FRS102.
■ Income must only be recognised when:■Entitlement (control passed to charity)■Probable (‘receipt is more likely than not’)■Can be measured reliably
# Government grant income
■Must disclose:■Nature and amount of government grants■Unfulfilled conditions and other contingencies■Mention of any other government assistance
received by the charity
Gifts In KindWhere material and measurable, include:
As income and expenditure any donated services/facilities E.g. donated/discounted equipment, beneficial loans, professional services, seconded staff (but not volunteers!)
As income and capital expenditure any donated assets
Donated goods, services and facilities■Donated tangible fixed assets for charity use
■Donated services and facilities
■Donated goods for resale
■Donated goods for distribution to beneficiaries
Donated tangible fixed assets for the charity’s use■Brought in at fair value when received
■ If no value available:■Cost to donor■Estimated net resale value (if it is to be sold)
Donated services and facilities
■Brought into income at value to the charity (why not fair value?) and equivalent expenditure
■But not volunteers!
Donated goods for resale
■Recognised at fair value on receipt (estimated resale value) and stock on balance sheet
■Where impractical (lots of low value items or no detailed stock records), recognise income when sold
Donated goods for distribution to beneficiaries■Recognised at fair value on receipt (estimated
resale value) and stock on balance sheet
■Recognised as a grant when distributed
■Where impractical or cost outweighs benefit to users of the accounts, recognise donations when distributed
Recognition of expenditure
■Little changed
■# Employee benefits (including liability for outstanding holiday pay or other entitlements)
Trustee and staff remuneration and other transactions■ Trustee expenses both reimbursed and settled directly
(# waived exps if material)■ # Aggregate disclosure of total amount of donations
from Trustees or related parties received without conditions
■ Staff disclosed by average head count (FTE optional extra)
■ Redundancy and termination payments seperately disclosed
■ # Total of benefits to key management
Grant making
■List of grants made to institutions can now be either:■In notes to the accounts■In the Trustees’ annual report■On the charity’s website with a link provided in
the accounts
Balance sheet
■Layout and captions unchanged
Social investments
■Extensive guidance now given:■Programme related
investments■Mixed motive
investments■Cost less repayments less
provision if repayment is unlikely
Liabilities
■# Long term liabilities discounted to present value
■# Retirement benefits – multi-employer schemes: recognise present value of additional contributions being made as liability
What do we need to do?
■Decide which SORP
■Which changes impact you?
■Take a look at www.charitysorp.org
Questions?
Automatic EnrolmentGUIDANCE FOR CHURCH EMPLOYERS
Joel Ryan – Church of England Pensions [email protected]
Agenda 1. Recap on Automatic Enrolment 2. Step-by-step guide 3. Check your staging date 4. Check who you need to enrol 5. Create your action plan 6. Pick a pension scheme 7. Write to staff 8. Enrol staff 9. “Opt out” and “opt in” 10. Ongoing duties – declaration of compliance
Recap on Automatic Enrolment Introduced in October 2012 with the aim of encouraging everyone to save more for later life.
Government hope people will be more engaged in their pension and plan better for retirement.
Automatic Enrolment will start for you from your “staging date”. This will be between now and 2017.
Almost 6 million people have been enrolled already. Only 7% have opted out.
Step-by-step guide
Check your staging date Find out when Automatic Enrolment starts for you.
You will need your PAYE payroll reference.
The Pensions Regulator will write to you 12 months and 3 months before your staging date.
Information on bringing your date forward.
Check who you need to enrol Step 3 of step-by-step guide 1. Eligible jobholder = must enrol 2. Non-eligible jobholder = can ask to join 3. Entitled worker = can ask to join but no employer contribution
Check who you need to enrol
Create your action plan
Step 4 of step-by-step guide.
Recommends starting to plan 12 months ahead.
You can set a contact to receive email alerts.
Pick a pension scheme Employer risk Member risk
Defined Benefit Defined Contribution
Consider: Employer v Member risk Costs (initial and ongoing)
Pension Builder 2014
NESTNOW PensionsPeoples’ PensionsInsurance Co’s
Pension Builder 2014 v Others…(1)
Pension Builder 2014 Others (i.e. NEST)
Type of scheme Cash BalanceWe guarantee contributions back plus bonuses
Defined ContributionContributions go up and down in line with investment market
Minimum contribution
8% of pensionable pay. Member contributions take before tax, so take home pay is more
2% until April 20185% until April 20198% from April 2019(member contributions after tax. Tax relief added later)
Life Cover 0.5% for 2x salary. Can offer 3 or 4x.Plus refund of “pot”
No multiple of salaryRefund of “pot” only
Pension Builder 2014 v Others…(2)Pension Builder 2014 Others (i.e. NEST)
Employer risk As we guarantee contributions back there may be small debt to pay if you stop using this scheme
None
Member risk Limited. Contributions guaranteed so can realistically plan for future. Use pot to provide retirement benefits
High. Pot can go down as well as go up. Makes long term planning very difficult
Administration We collect contributions from you by Direct Debit
Manually upload monthly contributions via Payroll
Other considerations
If move between Church members likely to be able to remain in the same schemeNo transfer in Fee = nil
We are free and easy to help you
Limit of £4,700 a year (to 4/17) No transfer in or out (review 4/17)Fee = 2.1% to member potsHelp can be harder to get without paying
Which scheme should I choose?Scheme
Looking to limit costs for a few years? NESTLooking to limit fees? PB 2014Looking to provide staff with better retirement guarantee?
PB 2014
Looking to limit employer exposure to risk? NEST
Do staff want to pick their own investments? NEST
Do you have staff with fluctuating hours? NESTDo you have staff who earn less than £5,824? (and don’t want to make Employer contribution)
NEST
Looking for help and guidance? PB 2014 (possibly)
Write to staff-Step 9 You can do this early to give staff warning.
You must do this within 6 weeks of them being enrolled.
Template letters are for Defined Contribution schemes. Will need tweaking if using PB 2014. We can review.
You can delay Automatic Enrolment for up to 3 months.
Enrol staffWhichever scheme you use, you can enrol staff electronically.An individual account will be set up for staff, and contributions stored under this account.The pension scheme will write to each member to welcome them to the scheme and let them know where they can find more information.The scheme will send an update known as a “benefit statement” each year.Changes in information, salary etc., can also be done electronically.
‘Opt out’ and ‘opt in’ Opting out Members do not have to join. They can ask for an ‘opt out form’ from the pension scheme.
There must not be any involvement from the employer. They can opt out at any time, if after 4 weeks of enrolment they may not receive a refund.
Opting in Members can opt in at any time. Must complete and ‘opt in form’. You will have to pay the same contributions for ‘Non-Eligible’ jobholders as ‘Eligible’ jobholders.
You do not have to pay contributions for ‘Entitled’ workers.
Ongoing duties- Step 11 1. Complete your declaration of compliance. You will need your PSR and EPSR.
2. Keep a record of everyone who has joined, opted in and opted out. 2. Keep an eye on your staff – how much they earn and how old they are.
3. Keep a record of the contributions you have paid. 4. Keep on top of opt ins and opt outs to ensure correct contributions are paid.
5. You will need to re-enrol everyone on a 3 year cycle.
Final points
1. Plan ahead! 2. Check what difference this will make to your budget. 3. Check whether there will be one off costs up front. 4. Check your payroll software. 5. Consult with staff if you need to introduce mandatory employee contributions.
6. Seek advice if you need it.
Helpful sources Guidance is available on the Pensions Regulators website. FAQ style guidance: www.thepensionsregulator.gov.uk/employers/additional-resources.aspx
Detailed guidance: www.thepensionsregulator.gov.uk/doc-library/automatic-enrolment-detailed-guidance.aspx
Church guidance on our website: http://tinyurl.com/cepbautoenrolment
Registered Charity Update
Charitable status and Registration
Filing Accounts
Annual return – changes in 2016
Charitable Status and Registration
All PCCs are charities , but most are ‘excepted’ from registration with Charity Commission
PCCs must register with Charity Commission if annual income exceeds £100,000
.ALL sources of income including restricted funds
Concession for 1 yr “blip” – with Charity Commission permission.
Registration or permission not to register
Include the fact that the PCC is a registered charity ( in accordance with Charities Act 2011) on cheques/letterheads/posters/invoices/receipts/ websites . You must show your registration number on your accounts and ideally on the other documents (but this is not required by law.)
Submit Annual accounts and returns (online) Report serious incidents Refer to parish resources website for detailed
guidance
http://www.parishresources.org.uk/pccs/
Key requirements for registered charities
Filing Accounts and completing annual return
Deadline : 31 October Can be done at any time after the APCM Charity Commission take action for late
filing -can be investigated or removed from the register if default more than once.
Online filing –pdf upload
Changes to Annual Return in 2015
This year the return asks information on whether the charity:
pays its trustees raises funds from the public works with a commercial business that raises
money for the charity has a trading subsidiary has written policies for
risk management, investment, safeguarding vulnerable beneficiaries, managing conflicts of interest, managing volunteers, handling complaints.
Consider which policies are needed
From 2016, additional questions have been added on:
how much income was received from: contracts from central or local government
to deliver services grants from central or local government.
Whether your charity has a policy on paying its staff
Whether your charity has reviewed its financial controls
No “right” answer- but the PCC as Trustees must consider what is appropriate . Online public charity records will reflect your answers
Changes to Annual Return in 2016
How can we support you? Training –New Treasurers; Cashbook;
Roadshows Treasurer’s newsletter three times a year, Regular updates to the Finance News section of
the diocesan website and online Handbook “Treasurers Learning Network” Luke 14-28
Forum- JOIN TODAY Telephone /email support for diocesan
cashbook and general queries
Thank you!
For giving up your time to come today
For all you do throughout the year managing the finances of your parishes
For working in partnership with us ensuring Parish Share contributions are made regularly and promptly- so we can provide stipends and houses for the parochial clergy.
For all the “behind the scenes” activities - planning new projects, reading the gas meters, banking the Sunday Schools “penny line”, sorting out the funeral fees, attending PCC meetings………………
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