Today I want to cover three of the areas from the new SORPs which are causing my clients some issues: volunteers, donations from trustees and trustee expenses.
In developing the new SORPs there was considerable discussion about whether we should place a value on volunteer time, in the same way that we account for donated goods or services received by charities.
As a charity auditor, I’m pleased they decided not to require charities to recognise the value of volunteers by way of an adjustment to the figures (how would you audit that?!) Indeed the SORPs specifically state that charities must not account for the contribution of volunteers as income. However, the new rules do require additional disclosures about the contribution by volunteers, where it is significant.
In the Trustees’ Annual Report charities must explain the contribution made by volunteers, which should help the reader understand the nature and scale of the activities undertaken.
The SORPs state that this may include:
- an explanation of the activities that volunteers support or help to provide
- details of the contribution in terms of volunteer hours or staff equivalents
In the notes to the accounts, charities must also include a description of the role played by general volunteers and provide an indication of the nature of their contribution.
Again, the example accounts prepared under the new SORPs published by OSCR and the Charity Commission are useful in illustrating how the regulators see these requirements being fulfilled.
Donations by Trustees
The FRS102 SORP has introduced a new requirement for Charities to disclose the total amount of donations received without conditions from Trustees and this is causing a number of charities to wonder how they can possibly comply. One possible solution that we are suggesting to clients is to ask individual Trustees to keep a personal record, and then ask them to complete a declaration at the year end to state the total donations in the year. (some charities already do such year-end returns asking Trustees to disclose any related party transactions or confirm that there have been none).
Finally today, the new requirement in both SORPs to disclose the total amount of expenses waived by Trustees. If your charity has a policy to reimburse Trustee expenses you now need to disclose the total amount not claimed and by how many Trustees, as well as how much was claimed!
Some of my clients have changed their policies, such that expenses are not routinely reimbursed, but only in exceptional circumstances with the permission of the chair (for example), meaning that trustees not claiming expenses were not entitled to them and therefore didn’t waive them! Others are considering asking trustees to do a year end return of expenses that they could have claimed but didn’t!
Next time I’ll talk about Support costs and Governance costs.
Jenny Simpson is a partner at Wylie & Bisset LLP and sits on the UK Charity SORP Committee.