CFDG to raise concerns about new accountancy rules for charities with the Accounting Standards Board
29th July 2011
Charity Finance Directors’ Group is concerned that some of the proposed changes to the UK financial reporting standards are unnecessarily demanding and will add to the costs of running a charity, particularly for those charities that generate income through charity shops.
CFDG is responding to the Accounting Standards Board (ASB) consultation on a new accounting standard, known as the Financial Reporting Standard for Public Benefit Entities (FRISBE), which will apply to all charities. It is expected to be brought in by the ASB some time in 2014.
While there are many positive aspects of the new standard, it also contains some proposals which would dramatically impact on the way that charities operate. The proposal about valuing donated goods is the most contentious issue. This would require all charities to place a value on donations to charity shops and recognise this in their financial statements, potentially leading to significantly increased stocktake and audit costs.
Jane Tully , Head of Policy and Public Affairs at CFDG said: “This will be a resource heavy and costly change for those charities that have charity shops. In addition to the practical issues and costs, there are very sound technical reasons why stock donated should not be included in the balance sheet. We are concerned that this will make accounts less useful and transparent to the public. The last thing we want is unnecessary bureaucracy, making it more difficult for charities to raise funds in this way.”
There are other areas within the FRSPBE where more discussion is needed. Jane added “recognising legacy income, making funding commitments to other organisations and valuing volunteering are issues that have been debated for some time. Charities have different views on these depending on their circumstances. Progress has been made on these areas in the charities SORP as a result of ongoing discussions; there are lessons from this process which could be applied here as the debate continues.”
CFDG’s members have been engaged in the debate through a variety of events and are keen to make their views heard to the ASB, especially around valuing donated goods.
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Notes to Editors:
1. CFDG is the charity that champions best practice in finance management in the voluntary sector. Our training and development programmes enable finance managers to give the essential leadership on finance strategy and management that their charities need. With more than 1,700 members, managing over £21bn, we are uniquely placed to challenge regulation which threatens the effective use of charity funds. For more information, please see www.cfdg.org.uk
2. The UK will be moving to a new accounting framework (International Financial Reporting Standards - IFRS) from 2014. The draft Financial Reporting Standard for Public Benefit Entities (FRSPBE or also known as FRED45) will sit alongside this accountancy framework and is intended to address some of the nuances of accounting in a not for profit context that are not considered by the international standards.
3. In June 2011 CFDG published a briefing paper on the consultation.
4. For more information please contact Katherine Smithson at email@example.com or on 0207 250 8347.