Information for Treasurers

Transcription

1 Information for Treasurers This document is intended for Treasurers but should ideally be provided to all trustees as part of their induction, as it covers a wider area than just the responsibilities of a Treasurer. It is essential that all members of a main U3A committee are aware that they are trustees, with specific responsibilities as a consequence. Registration Do we have to register as a charity? It is mandatory to do so in England and Wales once your income exceeds In Scotland if you wish to refer to your U3A as a charity you have to register with the Office of the Scottish Regulator (OSCR). In Northern Ireland, charity registration will not begin until towards the end of 2011 at the earliest, but you can apply directly to HMRC Charities for recognition as a charity for tax purposes, through a ChA1, which will provide you with a reference number. Under no circumstances can you use The Trust s registration number. If we don t register what status do we have? All U3As, as members of the Trust, have charitable constitutions based on the model provided by The Trust and are therefore charitable organisations. In England and Wales charities are subject to charitable law, as are registered charities in Scotland, but it is recommended that all U3As abide by the recommended best practice, as stated in this document. Trustee Responsibilities Who is responsible for U3A funds? Trustees are responsible for the proper handling of all its funds, including the monies paid at group meetings and social events. In the event that any financial irregularity should come to light at either main committee or group leader level, the trustees will be held liable as this responsibility cannot be delegated to non-trustees. It is not possible for an individual trustee to opt out of collective responsibility and trustees should therefore conduct their activities in such a manner as to reduce potential areas of risk. The topics covered in this booklet, with our best practice recommendations, will help trustees review their activities and minimise risk. Are trustees insured against any claims? All U3A committees are covered by Trustee Indemnity Insurance provided by the Third Age Trust, which protects the trustees both individually and as a board, providing they have acted responsibly and made a genuine mistake/error of judgement. If proper procedures have not been followed and/or the constitution adhered to or if trustees have become aware of bad practice and not put it right, they may not be covered under this policy. In all circumstances, an excess of 250 would apply. 1

2 Bank Accounts What sort of bank account should I set up? If you are in England and Wales, you should tell the bank that you are a charitable organisation with a charitable constitution and remind them that there is no requirement for you to register with the Charity Commission until your income exceeds 5,000. You will need to take your constitution with you to prove your status. If you are in Scotland, tell the bank you currently have the status of an unincorporated association and may in the future register as a charity. If you are in Northern Ireland, you have the status of an unincorporated association and you will be applying for recognition as a charity for tax purposes from HMRC. Stress that you are not a branch organisation but an independently managed voluntary group, otherwise they will write to The Trust, requesting permission for the account to be opened, which will delay it. If you are trying to open an account with the Co-operative Bank, you will probably find that they will insist on writing to us anyway! If you have any problems setting an account up, consult Lin Jonas at the National Office. Should we be paying bank charges? As charitable/voluntary organisations you should not be paying bank charges on your current account with the clearing banks. Do I need more than one bank account? Depending on the amount of reserves you are holding you may want to consider a separate interest paying account and if you are going to be organising quite a few social events, in addition to your activity groups, then you would certainly be advised to set up a U3A social account. How many signatories should there be on cheques? Cheques should be signed by 2 trustees from a pool of at least 4/5 although you may find some banks limit you to 3, which can prove difficult when you factor in holidays and illness. The signatories would usually include, Chairman, Vice Chairman and Secretary and should apply to all accounts including the social account. Where is the best place to put surplus funds? It is recommended that you consider CAF or the COIF account at CCLA for your surplus funds, as they pay interest based on the Libor rate which is usually better than bank base rate and with instant access. CAF is also one of the banks which offer a dual authorisation online account; the second signatory is ed to confirm the transaction. Social Accounts The Charity Commission in England and Wales, has no interest in your social events, as these are considered to be outside your educational objectives. It could be argued that most U3A activities have a strong educational element, but the following would be typical social events, open to all members: Theatre visits Outings Christmas lunches/wine & cheese parties etc. 2

3 It is important that you are consistent in the way you define social events and do not include study/interest group trips, which are related to their specific activities. The most practical way to handle social activities is via a separate bank account, which acts as a holding account, unless your social events are only occasional and therefore will not have a significant effect on your income. For convenience the organiser(s) can have paying in arrangements, but all cheques must be signed by two trustees. One of the main reasons for distinguishing social events from the normal educational activities of the U3A is that you are not allowed to fund social events from your main income i.e. members subscriptions/payments, which have to be used solely in pursuance of your objectives. In addition, the Charity Commission in England and Wales does not need to be advised of such activities. Thus, the total turnover of the Charity the U3A can be reduced by excluding the income from social events, thereby possibly keeping the total turnover below various reporting thresholds ( 25,000 and 250,000) and saving extra work. For convenience, it is recommended that all social events are reported on a net accounting basis by showing in the income side the monies received, either in detail or total, for all such social events less the actual expenditure incurred and carrying forward only the net figure into the accounts. In Scotland, if you are a registered charity, you are required to produce receipts and payments accounts for all the bank accounts you operate. In all cases, U3A members are entitled to a report at the AGM on your social activities, whether incorporated into the main account or not. If the Social Account needs financial support on a temporary basis, for example, to pay for tickets in advance, the main committee can provide temporary support. If there is a net annual cost of running these events, it can be rolled forward and handled on a swings and roundabouts basis, but the main U3A Committee cannot support continued losses. Ideally these events should break even or create a small surplus. Some U3As allow surpluses to accumulate in the separate social bank account against unforeseen contingencies. By all means keep a small positive balance but put the rest into the main account to be used to support your primary objectives. Issues Around Income Membership Fees How are U3As funded? There are 2 popular ways :- Option 1 An annual subscription which covers all membership activities. 3

4 Advantages Easier to budget Easier to handle Bulk of money comes in at the same time and can be earning interest Encourages member participation in more study groups Easier to set and maintain membership fee at appropriate level. Disadvantages If you get it wrong and need to increase it before your AGM, you will need an EGM to approve it A request to gift aid your subscriptions is more likely to be turned down Members will expect to get access to the groups they choose Depending on the number of members, the 25,000 income threshold may become a reality. Option 2 A small annual subscription covering general meetings and/or newsletters only, for example, with all other activities paid for separately, which can either be a set fee per session or on a selfsupporting basis. There are also two separate ways that this can be managed: a) A fee paid to your U3A by every member attending a study group, typically 30p per person per session, plus meeting any other costs of the group such as materials or room hire. b) Members attending pay only the costs associated with the group, such as materials and room hire. The Trust prefers the first way because it clearly establishes that the group is part of the U3A and not independent. It also allows for the lowest possible membership subscription as members are contributing by belonging to a study group. Advantages Steady supply of money throughout the year Members pay for what they attend which could be considered to be fairer Lower membership fee may encourage more members More likely to be able to gift aid your subscriptions. Disadvantages Harder to budget It can lead to group leaders having to deal with small amounts of money, which if they exceed an agreed petty cash limit, will require banking May discourage member participation because it can become too expensive, particularly if groups are expected to be totally self-supporting. What general factors should be taken into account when considering the fee structure? You should try to set a fee which will provide you with sufficient funds to consider the following :- Funding one or more of your members to attend the Conference and/or AGM Direct mailing of U3A News to your members (currently 1.60 per subscription) Building up adequate reserves. 4

5 Group Activities Under Option 2 These remarks apply to those U3As who charge separately for group membership, in addition to an annual fee. For those U3As where the annual fee is all inclusive, most of these remarks will be irrelevant. Groups which charge separately fall into 3 categories:- a) Small Groups in houses Either a small payment being made for each meeting by each attendee to the host to cover tea/coffee, or a slightly larger payment split between the host and U3A funds, which would be handled as petty cash by the Group Leader and paid to the main Committee with a completed financial return, once the agreed petty cash limit is reached. b) Larger Group in a hall The addition of the rent for the hall adds complications. You must ensure that an extra contribution is levied to cover the hall rent. If this is levied each meeting there is a risk of low numbers not meeting costs. Why not suggest payment in advance by members to cover payment in advance to hall owners? Such payments should be made through the main committee/treasurer both in and out. These payments could include an additional levy as in a) above and the same arrangements would then apply. c) Even larger groups with rented hall and possibly an occasional visiting speaker. More care is needed to ensure costs are covered with sufficient numbers attending, but it is recommended that all transactions are handled either through the main bank account or one of the other established U3A bank accounts. It is not recommended that the Group Leader is asked to collect all monies and dispense expenses to the hall owners and the speaker etc., even if remitting the net surplus to the Committee. It is perfectly acceptable for the U3A Committee to subsidise any interest group by covering losses or costs, as these core activities of the U3A. NB. It is essential that bookings for outside accommodation are handled by the committee, on behalf of the U3A. As stated before, it is important for groups to feel a strong connection to their U3A and one of the main ways of achieving this is through the financial arrangements you put in place. If we adopt the system of each study group being self-supporting should they be allowed to open their own bank accounts? Under NO circumstances. It is very dangerous and extremely unwise to have any U3A accounts over which you and your committee have ultimate responsibility, without your having personal day to day control. If any group generates significant income you should give them a paying in book or arrange for them to pass you money for banking, should it exceed 50 or whatever petty cash limit 5

6 you set. Remember the committee has total responsibility for ensuring safe custody of members money. How frequently should groups report their incomes and expenditure? Either quarterly or half yearly will usually be acceptable, unless the income exceeds 50 on a regular basis, in which case look for more frequent returns for those groups with high incomes. This is essential to protect both you and the Group Leader. Cheques The use of cheques will be phased out by The Trust is in touch with The Payments Council over this matter, because of the significant impact on our activities for both income and expenditure. The Trust will keep you advised accordingly as new solutions are found. Expenditure/Payment Issues Paying by Credit/Debit Card Particularly in the social area, it is becoming more difficult to book and pay for activities by cheque as many theatres etc. now adopt a payment by card only policy. As a consequence organisers have resorted to using personal credit/debit cards. This practice is not recommended because of the lack of trustee control and the potential risk should a supplier go into administration, as it is possible that only the proportion of the payment pertaining to the individual would be covered rather than the full debt. The only alternative, assuming cheques are not acceptable, is to try for a debit card on your charity account, using two of your mandated signatories to obtain the card in the name of the organising trustee, who must also be a mandated signatory. However, it is important that trustees set a clear policy for use which incorporates strict controls, for example single and monthly payment limits, all payments to be supported by an invoice or receipt and reported to the treasurer immediately, bank statements to be sent to other members of the committee etc. There should also be a regular review of procedures by the committee to ensure controls are effective. We are aware that U3As are still experiencing difficulties with debit card applications but if you are turned down at local branch level, insist that your request is referred to the head office. It is important to remember that charity banking is covered by the business department of the bank not the retail sector and you may not have a business operation at your local branch. Internet Banking The Charity Commission does NOT recommend allowing one authorised signatory to initiate single transactions online and suggests that online banking is confined to those banks which offer the security of a dual authority option currently these number three - CAF, Unity Trust and the Cooperative Bank but more are expected in the near future. The reasoning behind this, is that charities would have the same level of financial control with an online account, as they do with a standard bank account, requiring 2 trustee signatories on cheques. It is however acceptable to have an online bank account for inter-bank transfers between your accounts, committee authorised direct debits, payments to regular suppliers and for downloading 6

7 statements. Of course if you do have a debit card, it allows its use to be monitored as often as you wish. Clearly the trustee operating the online account should be different to the trustee using the debit card and the committee should ensure the same level of security for the use of an online account as it does for the use of a debit card, with a regular review of its operating procedures. If you have problems obtaining internet banking, the same comments apply as for debit cards. Payments to other charities A one-off donation to another charity at a request of a speaker, does not contravene any rules on payments to other charities. However, you would be advised to ask the speaker to put the request in writing and indicate it in your accounts as a payment in lieu of a fee. It is also acceptable to arrange a small fundraising event, for example, a second hand book sale, in support of a local charity providing it is clearly indicated that all monies raised will be going to that particular charity. In this situation if you can count the cash and hand it straight over that would be ideal. Failing that, you must not under any circumstances put it into your main U3A bank account and probably the easiest way of dealing with it, is for you or one of your fellow officers to make out a personal cheque and then bank the cash. Paid Speakers/Tutors It is understandable that U3As will often have to pay modest fees to speakers for their general meetings, but it is not normal practice to employ tutors on a fee paying basis. However, if your committee feels it is justified to do so on a short term basis, you must have written assurance from the person in question that they are registered with HMRC as self employed for tax and national insurance purposes and you must get their national insurance number. If you do not have this information, you will be considered in law to be an employer, with responsibilities for deducting tax and national insurance. You are of course allowed to repay legitimate expenses without attracting the kind of scrutiny outlined above. In addition, there are serious insurance implications as the public liability policy provided by The Trust, will not cover paid tutors because it does not include Employers Liability Insurance see the Paid Speakers/Tutors section in the Insurance booklet. Expenses Are there any guidelines on the payment of trustee expenses? Expenses are refunds of costs which a trustee has incurred in order to carry out trustee duties. As a general rule, claims for expenses should be supported by receipts except where it is unreasonable to expect this (e.g. where very small amounts are claimed). Examples of legitimate expenses would be travel to and from trustee meetings and on trustee business, postage costs and telephone calls. All expenses should be authorised by one of the officers and of course no-one should authorise his/her own claim. What about Group Leaders/members? It is perfectly acceptable to reimburse group leaders for all legitimate expenditure, which may on occasions include a mileage allowance for using their car on U3A business. In addition, if you have members regularly using their vehicles to ferry other members around, you would be advised to establish some rules so that the driver receives a contribution towards petrol costs. This would 7

8 usually take the form of a mileage allowance with the total cost split between the occupants of the car. Accounts/Year End & AGM Charity Accounts - What do we need to produce? England and Wales Charity Commission Unless your income exceeds 25,000, you will not be required to submit accounts. If it exceeds 25,000 but remains under 250,000 you have to submit accounts prepared on a receipt and payment basis and there are some very useful publications on the Charity Commission website ( CC15b Charity Reporting and Accounting: the essentials and CC16 Receipts and Payments Accounts Pack which can be downloaded. These can also be obtained by telephoning Scotland OSCR Receipts and Payment Accounts where income is below 100,000, full accrual accounts for an income exceeding 100,000 but under 500,000. The website has some helpful publications e.g. Scottish Charity Accounts/A guide to the 2006 Regulations Parts 1 & 2 which can be downloaded and you can also ring and request them. Should our accounts be audited? There is no requirement to have your accounts audited in England, Wales and Scotland unless your income or expenditure exceeds 500,000. Should our accounts be examined? U3As in England and Wales with an income under 250,000 should have an independent examination by a person with the requisite knowledge and practical experience. If your income exceeds 250,000 the examiner must have an appropriate qualification and membership of a relevant professional body. In Scotland, an income beyond 100,000, requires an examiner to be appropriately qualified with membership of a relevant professional body. U3As in Northern Ireland are advised to follow the recommendations for England and Wales for the time being. How long do I have to keep financial records? A minimum of 6 years. Do I need special accounts software for my computer? This is not essential and many U3As cope by using an Excel spreadsheet which replaces a manual cash book and shows income and expenditure analysed in columns month by month. As you get bigger, however, the use of accounting software will greatly assist regular reporting throughout the year and the setting of budgets. Year End What factors should I take into account when setting the year end? You should consider the following :- 8

9 The Trust s membership year is April to March, so you will be invoiced for a pro-rata amount if you join during the year and then for the full membership fee on 1 st April thereafter, so you need to ensure you have funds available. The dates of your year-end and AGM are of course linked, as the AGM has to receive the Annual Report and Accounts. Can I change my year-end date if I find I am having problems? Yes, by either having a shortened or extended year and this can either be presented to the members at an AGM or if you have the year-end date in your constitution, which is not recommended, it will have to be proposed and voted on and will only be allowable if the appropriate percentage vote is achieved. AGM Requirements What do I need to produce? You will have prepared your accounts for approval and will have provided details on income and expenditure, assets and liabilities e.g. un-cashed cheques and a balance sheet and these will have been examined by an examiner appointed by your committee prior to the AGM. Assets Register Do I need to keep an assets register? Definitely, especially when various pieces of equipment are stored in different places. It should also be included in your balance sheet when reporting at your AGM. Other Finance Matters Reserves/Surplus Funds What is an acceptable level of reserves? The Charity Commission suggests approximately 6 months running costs and certainly no more than 12 months, to be decided once due allowance has been taken for known commitments e.g.rental or lease costs. You may find if you hold more than 12 months reserves, you will be refused outside funding such as Awards for All. If in the future we find ourselves with surplus funds above and beyond our reserves how should we deal with this situation? Having established an acceptable level of reserves you should be using your income to further the objectives of your U3A, not allowing the amount in your bank account to increase year on year. You should consider using some of the money for the purchase of capital expenditure items which will benefit your members e.g. a PA system, projectors, laptops etc which you will, of course, depreciate annually. You can also make use of your surplus funds to freeze the membership subscriptions for a period until the bank balance becomes more justifiable 9

10 Gift Aid I seem to hear different things about gift aid; where can I get some advice? Ask the National Office for a copy of the Gift Aid Advice Sheet and then, if you need further information, ring Lin Jonas. Petty Cash How do we handle petty cash? Try to keep to a minimum, as it is much easier to account for cheques in and out. If money is accumulating rapidly, make frequent payments into your bank account. This also applies to groups, as there is a significant risk of an uninsured loss in the event of theft or fraud our insurance policies only cover cash up to 300 in members homes. Use petty cash vouchers to keep records. Free Trips when organising travel One area which is very difficult and can lead to major problems and disagreements is that of Travel Organisers/Group Leaders going on free trips. It is a recognised practice that Tour Operators offer a free trip for, say every 20 members booked. This freebie should be declared to the U3A Committee so that a decision can be made on whether it should be offered to the leader/organiser as a thank you or shared between all the travellers as a discount. A trustee must not receive any personal benefit. In view of the above it is incumbent on all trustees to ensure that their Travel Operation is run in a properly regulated manner. Any failure so to do could be interpreted as an attempt to deceive, which is fraud. VAT Publicity materials e.g. posters, leaflets, flyers, brochures, magazines and newsletters are zero rated. October