HFMA revises example annual report and accounts for NHS charities
The updated document takes into account the revisions to the FRS 102-based SORP (statement of recommended practice) that were made by Update bulletin 1, as well as the recommendations made in Information sheet 1, which was published in April 2017. We looked at the detail of these requirements in the technical update in the July issue.
From 2015/16, all charities with gross income of more than £500,000 are classified as large charities and will therefore have to meet the additional reporting requirements set out in the SORP. This did not affect the example set of accounts, because the example charity was already classified as large. But all NHS charities with income of between £500,000 and £1m will be affected by this change.
The FRS 102 SORP requires that prior period comparatives are included in the accounts in all instances other than where FRS 102 specifies otherwise. The information sheet reminds preparers of accounts that this requirement applies to the note that analyses movements in funds.
The HFMA understands that the requirement for comparatives for this note was often overlooked by charities when they adopted the new SORP. All charities need to make additional disclosures in relation to fundraising from accounting periods starting on or after 1 November 2016.
For NHS charities, this will be 2017/18 but early adoption is encouraged and NHS charities may want to early adopt these new disclosures in their 2016/17 accounts. The new reporting requirements are set out in section 9 of CC20 Charity fundraising: a guide to trustee duties and are applicable to large charities.
The Charity Commission has recently issued several pieces of guidance that may be useful for NHS charities. First, it has amended its guidance to charities issuing grants to non-charitable bodies. As most NHS charities are grant making and their main recipients, NHS bodies, are not charities, this guidance represents best practice.
Essentially, when grants are made to non-charitable bodies it is important to ensure that the grant is used only for activities, services or outcomes that will further the charity’s purposes for the public benefit. The guidance sets out how this can be achieved.
Second, the guidance on reporting serious incidents has been updated following consultation. The guidance has been revised to make it easier to follow and now includes checklists and examples. Auditors of charities are now required to report if they issue a modified audit report.
The Charity Commission has reviewed all audit reports that were modified and has pulled together the lessons learnt in a document. Most modifications were due to lack of evidence to support the numbers in the accounts or material non-compliance with the SORP, usually relating to group accounts or valuation of property, plant and equipment or pension liabilities. Hopefully, none of these issues would be found at an NHS charity.
Third, any independent examination of a charity must comply with the new directions to independent examiners in relation to accounts reviewed or signed on or after 1 December 2016. Early adoption is encouraged.
Debbie Paterson is an HFMA technical editor
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