Treasurers Cashbook & Accounts Session 3. Training Day 26 th January 2015, Receipts & Payments Accounting

Transcription

1 Treasurers Cashbook & Accounts Session 3 Training Day 26 th January 2015, Receipts & Payments Accounting

2 Sessions 3: Receipts & Payments Accounting Statutory Framework Useful Resources Basic Principles and structure of financial statements Trustees Annual Report Format of Receipts & Payment Accounts and notes Independent Examination Fund Accounting Common Errors in PCC accounts and financial controls Any questions?

3 Statutory Framework Statutory Framework All PCCs must prepare accounts and submit at the AGM each year. Receipts and Payments accounts acceptable until the accruals threshold of 250,000 is reached, then accruals accounting becomes necessary Unlike other charities which are separately registered with the Charity Commission, PCCs are Excepted Charities which are not required to register until their turnover exceeds a 100,000 in a year. This is because the PCCs are under the umbrella body of the DBF, which is itself monitored by the Charity Commission. Under Church Legislation, all PCCs must submit their accounts to the DBF each year. 3

4 Resources PCC Accountability Book Comprehensive resource for accruals and Receipts and payments accounts available to view on the Church of England website at and from Amazon at about 11 ACAT Association of Church Accountants and Treasurers Membership is currently per year useful support and handbook, free updates sent to members. Treasurers Handbook Available on the DBF website, hard copies can also be sent out Treasurers Learning Network (Luke 14v28) An online network available to all PCC treasurers joining details on the website or via Richard Illidge. About 10% of PCC treasurers are members. 4

5 R&P Accounts - Basic Principles Money recorded when spent or received, in contrast to accruals accounting when expenses/income is matched to the period to which it relates No Balance sheet required in the accounts, but a statement of assets and liabilities should be produced, listing amounts receivable and payable by the PCC at the end of yhe year. Simpler to produce than Accruals accounts, and governed by less legislation 5

6 Financial Statements structure A set of Receipts and Payments accounts is made up of the following four elements: 1. Trustees Annual Report (details the aims and achievements of the church in the year) 2. Receipts and Payments Account and associated notes (main account can be produced via the cashbook) 3. Statement of Assets and Liabilities (A list of bank accounts, investment assets, amounts owed to or from the church and assets retained for church use) 4. Independent Examiner s Report 6

7 Trustees Annual Report Follows a prescribed format Not usually written by the treasurer, although he/she may be consulted for the financial elements Needs to be consistent with the financial statements (this should be checked by the Independent Examiner) Is presented together with the Financial Statements Will provide information about the church s activities, structure, governance, financial health and strategy, and aims and objectives, with an evaluation of the past year. The Parish Resources website provides further details at: 7

8 Format of Receipts and Payments Account and Notes Can print off the cashbook version once it has been checked Additional notes to the accounts are often useful. At the least, the notes should provide the following: 1. Additional information on different receipts and payments headings to help the user of the accounts better understand them 2. A description of each individual fund, detailing how it came into being, the purpose of the fund and restrictions on spending income/capital 3. A reconciliation of the movement on each individual fund. Parish fund codes in the cashbook can be useful here 8

9 Statement of Assets and Liabilities Not a Balance sheet, but a list Show the value of bank, cash and investments balances at the year end (this information is found on the Balances tab of the cashbook) Also show any amounts which the PCC owes or is owed at the year end. Do not include accruals where an invoice has not yet been raised List the assets retained for church use but do not need to include a monetary value for fixed assets if not available 9

10 Independent Examination of PCC accounts All PCC accounts must be independently examined, by someone of appropriate skill and experience Once income is over 250,000, the examination must be done by a qualified accountant. The requirements for an Independent Examination are detailed in the Charity Commission publication CC32 Independent Examination of Charity Accounts: Examiners, which may be downloaded from the link at chment_data/file/325737/cc32text.pdf Further guidance is on the Parish Resources website. An appropriate report should be used by the examiner Independent examination is an area of weakness for a number of PCCs:

11 Independent Examination of PCC accounts Not always easy to find an appropriately skilled person unless a professional firm is approached and PCCs are looking for this job to be done for free, or at a minimal cost The DBF is currently looking into helping resource Independent Examiners, either by offering central training, or, possibly, developing a pool of examiners who would be available to carry out the work at minimal cost If you are interested in training for Independent examiners, please let me know chris.gould@bathwells.anglican.org; tel

12 Fund Accounting It is a fundamental requirement for all types of accounts to handle the different types of fund correctly. There are 4 main types: Unrestricted General (may be used for any purpose) Unrestricted Designated (designated by the PCC for a particular purpose, but may be undesignated at a later date Restricted (restrictions on use of the funds are imposed by the donor, surplus funds should be returned to the donor if not required for the purpose they were given Endowments (Permanent or Expendable) (A type of restricted fund given in the form of capital, which may either be spend (expendable) or not (permanent), with the income applied to a particular object) 12

13 Fund Accounting common areas of difficulty Gift Aid on restricted donations Here, the gift aid claim should also be restricted, unless the donor has indicated otherwise Collections for third parties If the PCC holds a collection for another charity, then legally these are PCC funds and must pass through the accounts of a charity via a restricted fund Gift Aid may be claimed and applied to the restricted fund then passed on to the charity concerned A PCC may not restrict its funds, they may only be restricted because of the donor s wishes

14 Common errors in PCC accounts Transfers between funds these are sometimes incorrectly described as income / expenditure in the accounts of each fund artifically increasing total income Independent Examiners Reports sometimes missing, incorrectly worded, or signed off when there are obvious errors in the accounts No Trustees Annual Report, or Statement of Assets and Liabilities Income and Expenditure terminology incorrectly used unless accruals accounts are used, the terms Receipts and Payments should be used instead Accounts are unclear and difficult to understand standard formats are available and notes can help clarify the accounts

15 Accounting controls Bank reconciliations Dual signatures on cheques Dual authorisations required on online banking transactions Adequate documentation to support all expense claims Fees to be handled by the PCC rather than the incumbent Avoid the use of slush funds and similar 15

16 Any Questions Many thanks for coming. Please complete the feedback sheet as you leave which will assist in planning future days. 16