I work as a finance manager for a medium sized charity and I would like to
make the following comments:
I recognise the imperative to standardise accounting standards across
international boundaries, and the largest charities operate on a similar global
scale to the largest private sector entities. Charities must be as
accountable to stakeholders as are entities in other sectors.
Charities differ from commercial entities and public sector entities both in
their purpose and in the legal/regulatory framework within which they
operate. This needs to be reflected in their published financial
statements, and is done so currently (and in my view very effectively) by the
SORP that applies to charities. This has evolved over the last 10 to 15
years into a document that is widely understood and accepted in the charity
sector.
We need to find a solution that achieves an acceptable balance between the
above two statements.
I think that the most straightforward solution would be to retain a
separate reporting standard for charities, based on the existing Charities SORP,
but incorporating changes (e.g. in asset valuations, recognition of liabilities)
that arise from the application of international standards. The current
SORP substantially meets the needs of users, primarily those who work in the
charity sector and those who fund charities.
On a point of detail, there is an ongoing debate over the issue of whether
or not the time of volunteers should be valued and incorporated in the accounts
of charities. I believe that inclusion of such a figure in the primary
statements would be too subjective (e.g. what hourly rate would one
apply?). The current requirement is that the contribution of volunteers
should be commented on in the narrative of the Trustees Annual Report, and I
would suggest that this be extended to include an estimate of the value of the
volunteer contribution in £, with an explanation of how the notional hourly rate
was arrived at.
I hope that you find these comments helpful. Please let me know if
you would like me to clarify any aspects, or if you would like me to comment in
more detail.
Kind regards
Clive Sexton FCCA DChA