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SORP 2005 Training for PCC Treasurers VENUE SORP 2005 – I The Law Charities Bill Church Representation Rules Church Accounting Regulations 2006 Trustees Act 2000 SORP 2005 Charities Bill 12 Statutory Charitable Purposes Religion stays in top three along with Education and Poverty

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sorp 2005 i the law

SORP 2005 – IThe Law

Charities Bill

Church Representation Rules

Church Accounting Regulations 2006

Trustees Act 2000

SORP 2005

charities bill
Charities Bill
  • 12 Statutory Charitable Purposes
  • Religion stays in top three along with Education and Poverty
  • Public Benefit Test
  • Two main implications for PCC’s

Lichfield DBF

charities bill implications
Charities Bill Implications
  • Audit threshold to increase from £250k to £500k
  • Over £250k, the Independent Examiner must be professionally qualified in accordance with the Companies Act 1985
  • Charity registration threshold - £5k gross income - £100k for religious charities

Lichfield DBF

changes after registration
Changes after Registration
  • PCC's registered with the Charity Commission will need to complete an Annual Return for the Charity Commission
  • Copy of Annual Accounts to the Charity Commission and a copy sent to the Diocese.
  • We hope to make this process easier, by seeking to standardise these accounts

Lichfield DBF

sorp 2005 ii overview

SORP 2005 – IIOverview

No significant changes from SORP 2000

Major changes are in Annual Report

All PCC accounts must have an audit or

Independent Examination

Consider the options that apply to your PCC

Think ahead !

2005 Comparatives may need restating

teams united benefice pluralities
Teams, United Benefice, Pluralities
  • Each PCC as the legal entity is responsible for preparing the Annual Accounts.
  • United Benefice – each PCC responsible
  • Teams with PCC’s, each produce accounts
  • Teams/Pluralities with DCCs,the responsibility of accounts lies at the PCC level.
  • Aggregate Accounts for Threshold limits

Lichfield DBF

thresholds what to include
Thresholds – What to include ?

Income Includes (Unrestricted & Restricted)-

  • Gross Income, no netting off
  • Voluntary receipts
  • Gross Income from events
  • Investment Income
  • Any endowment transferred – normally a wound up smaller trust

Lichfield DBF

income threshold
Income Threshold

Do not include:-

  • Loans received
  • Proceeds of investment sales or sale of any fixed assets
  • Endowments

Lichfield DBF

expenditure
Expenditure

Gross expenditure from all funds include:-

  • Endowments

Exclude:-

  • Making of a loan
  • Repayment of a loan
  • Purchase of Investments or Assets

Lichfield DBF

unrestricted and restricted funds
Unrestricted and Restricted Funds
  • Unrestricted – money given for the general purpose of furthering the mission of the church
  • Designated Funds – origin Unrestricted
  • Restricted – Donation, legacy, gift etc that can only be used for specific purposes or has specific clauses attached

Lichfield DBF

surplus on restricted appeals
Surplus on Restricted Appeals
  • Surplus on appeals should either be retained in the restricted fund or returned to the donor(s).
  • Solution to problem ?

Lichfield DBF

endowments
Endowments
  • Expendable – where the capital and income can be spent for a specific purpose
  • Permanent – where the capital can not be spent, only the income for the purposes directed by the donor
  • Costs incurred managing the Endowment can be charged against the fund. If insufficient then paid from Unrestricted Funds

Lichfield DBF

accounting for funds
Accounting for funds
  • System must be in place to allow each fund to be accounted for
  • Receipts and Payments – a separate R&P must be prepared for each fund
  • Accruals – column format allows funds to be aggregated, although reserves in each fund and movement should be shown in the notes

Lichfield DBF

incumbent warden trusts
Incumbent & Warden trusts
  • Trusts for ecclesiastical purposes
  • Trusts for educational purposes
  • Trusts for relief of poverty
  • Any trust administered by the PCC must be accounted for by the PCC; may be Restricted
  • If administered separately, or where PCC is Custodian, then put in the notes

Lichfield DBF

assets and valuations
Assets and Valuations
  • Predominantly for those doing accruals
  • Church Building: do not include in accounts, but Insurance Valuation is recommended in notes as way of reference to Trustees Annual Report (TAR)
  • Inalienable Property – do not account for. Any purchases write-off in year of expenditure

Lichfield DBF

valuations
Valuations

Receipts and Payments –

  • No Valuations required, but note details in Statement of Assets and Liabilities

For Accruals –

  • Church Halls – Cost or valuation less Depreciation
  • Investments – Market Value
  • Assets – Lower of cost or realisable value

Lichfield DBF

sorp 2005 iii

SORP 2005 - III

Income & Expenditure

Receipts & Payments

income
Income
  • Voluntary Income – planned giving, Gift Aid, Grants, Donations, Appeals, Legacies
  • Activities for Generating Funds - Gross
  • Income from Investments – dividends and interest
  • Income from Church Activities – Lettings
  • Other Income

Lichfield DBF

expenditure21
Expenditure
  • Costs of Generating Funds
  • Charitable Activities – may wish to link these with the objectives in the annual report
  • Governance Costs
  • Other

Lichfield DBF

receipts and payments
Receipts and Payments
  • If under the £100k threshold to less burden you may opt for the Receipts and Payments
  • Communicate a clear picture
  • Do not use words such as Income & Expenditure or Balance Sheet
  • Only use and clearly marked Receipts & Payments and Statement of Assets & Liabilities

Lichfield DBF

receipts payments
Receipts & Payments
  • Recommend two signatures – one clergy one laity where possible.
  • The accounts must show consistency
  • The accounts must be material
  • Must show a separate Receipts and Payments account for each Restricted Fund
  • Column segregation is acceptable but the notes must distinguish each fund

Lichfield DBF

sorp 2005 iv

SORP 2005 - IV

Statement of Assets and Liabilities

&

Balance Sheet

statement of assets liabilities
Statement of Assets & Liabilities
  • Cash and Bank – includes CBF Deposit.

Do not include fixed term cash deposits !

  • Other Monetary Assets – Funds due
  • Investment Assets – no need for valuation, however an approximation should be included in the notes.

Land and Buildings held require a brief description

  • Other Fixed Assets

Lichfield DBF

liabilities
Liabilities
  • Obligation to pay after the year end – Parish Share Arrears, Loans, Collections due to third parties
  • Do not include commitments to make a payment for future benefit – i.e. leases
  • Just make a note
  • Liabilities should be shown against the respective fund

Lichfield DBF

grants
Grants
  • Grants received – only account what has been received for Receipts & Payments, under accruals what should is due in the year
  • Grants Paid – R & P account for the payment in the year, the balance as a liability. Accruals – account for the total commitment, and payments in later years go to liabilities

Lichfield DBF

balance sheet
Balance Sheet
  • Fixed Assets

Freehold Property – cost or revaluation

Leasehold Property

Fixtures, Fittings, Equipments – net book value

Work in progress – at cost

Investments – at market value

Heritage assets

Lichfield DBF

heritage assets
Heritage Assets
  • These refer to assets that are of historical or artistic importance that are held to advance preservation, conservation and educational objectives of charities. Your church may have some paintings or artefacts that are held historically by the church.

Lichfield DBF

balance sheet30
Balance Sheet
  • Current Assets

Stock, Debtors, prepayments, accrued income, investments, cash

  • Current Liabilities

Analysed between short term (in year year) and long term (over one year)

Should be analysed between loans, creditors for goods and services, accruals, owed to a party related to the PCC

Lichfield DBF

balance sheet31
Balance Sheet
  • Of course the Balance Sheet should make it clear and distinguish the assets and liabilities of the funds that are Unrestricted, Restricted or Endowments.

Lichfield DBF

payments to trustees
Payments to Trustees
  • The new Charities Act and the SORP allow payments for services to the trustees, provided they are in the minority and the cost justified
  • Any remuneration or expenses paid to any trustee must be disclosed in the notes to the accounts

Lichfield DBF

sorp 2005 v

SORP 2005 - V

Trustees Report

trustees report
Trustees Report
  • Identification of the Parish Church
  • PCC Members and Officers
  • How the PCC operates, sub committees
  • Activities, new developments
  • However try not to make it too long or complicated
  • Use photographs, graphics etc.

Lichfield DBF

trustees report35
Trustees Report
  • Look at it as a form of communication
  • Not just another job for the Treasurer
  • Puts the financial statements into perspective and relates them to the wider life of the church
  • PCC must adopt the report prior to the AGM
  • Beware and do not try to write the report by Committee
  • Independent examiner will need to see a draft

Lichfield DBF

risk management
Risk Management
  • Only applicable to those over the Audit Threshold, however all PCC’s should consider how their church is at risk
  • Financial Risk
  • Reputation Risk
  • Statutory and Legal Risk
  • Operational Risk

Lichfield DBF

reference and administration
Reference and Administration
  • Name and location of church
  • PCC members (all who served in the year)
  • Officers of the PCC
  • Name and address of bankers/legal or other advisers / Independent examiner / Auditor *
  • Name of Incumbent *

Lichfield DBF

structure governance management
Structure, Governance & Management
  • How was the PCC constituted
  • Any related trusts or charities
  • How members are appointed
  • Policies and procedures for inducting and training new members *
  • Structures – sub committees *
  • Risk Management *

Lichfield DBF

constitution
Constitution

“The Parochial Church Council is a corporate

body established by the Church of England.

The PCC operates under the Parochial Church

Council Powers Measure. The PCC is excepted by

order from registering with the Charity

Commission.”

Lichfield DBF

objectives and activities
Objectives and Activities
  • In addition to promoting the Gospel and doctrines of the Church of England
  • Mission or Vision Statement
  • Other objectives, could include building work *
  • Any strategies *
  • Contribution of volunteers *
  • Grant making policies or commitments *

Lichfield DBF

achievements and performance
Achievements and Performance
  • Number of different services
  • Attendances, baptisms, confirmations
  • Any activities, missions, fundraising, pilgrimages, community events
  • Performance against previous years objectives *
  • Investment performance, fund raising

initiatives etc *

Lichfield DBF

financial review
Financial Review
  • The current financial performance, against budget
  • What is needed to continue the work within the church
  • Reserve Policy – Unrestricted, Restricted etc.
  • Principal funding sources *
  • Investment Policy *

Lichfield DBF

independent examiner
Independent Examiner
  • Must be selected each year at the AGM
  • Can receive a modest fee
  • An independent person who is reasonably believed by the trustees to have the requisite ability and practical experience to carry out a competent examination of the financial statements

Lichfield DBF

independent
Independent ?

Must not be:-

  • A member of the PCC or any of its sub committees
  • An employee of the PCC, or a person receiving benefit or support of PCC funds by way of gift (other than a fee as examiner)
  • A close relative, business partner or employee of any person who falls within the above two points.
  • They can be a member of the Church with their name on the Electoral roll

Lichfield DBF

many thanks

Many thanks

For all your work and commitment