CHARITY ACCOUNTS: 
REQUIRED DISCLOSURES

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Many charities will find the notes to their accounts have increased under SORP 2. The aim is to give the reader of the accounts a better understanding of the operations of the charity by giving more information along with the accounts and some in the Trustees Annual Report.

Below we discuss some of the main disclosures which will be required, many of which may be new to your organisation's accounts.

Deferred Income

Where you are carrying forward part of your income because it relates to a future period you will need to give an explanation in the notes as to how this has arisen. This will help prevent organisations deferring income just because they have not spent it, rather than because the donor intended it to cover a future period.

The full income received and the deferred portion should be shown on the face of the SOFA.

Donated Assets, Volunteer Time and Donations in Kind

Where assets which have been given to you for distribution to your clients (eg. mobility aids) remain undistributed at the year end, the accounts must show the approximate value of these.

Where it is not possible to put a value on gifts of time or materials, mention should be made of this in the Trustees Annual Report.

Grants

The source of any major grants should be given in the accounts.

If you are likely to have to pay back part of a grant then this should be included in contingent liabilities in the accounts.

Details should be given of different types of investment income, eg. bank interest and share dividends.

Detailed analysis must support these categories.

The name of the recipient and the amount given must be disclosed where the grant is more than 5% of total expenditure, or exceeds £1000. The name does not have to be disclosed if it would endanger the individual. You only need to disclose the main 50 grants.

These loans of course, should only be made in the furtherance of the charity's objects. Rates of interest and amounts involved must be disclosed.

Where the charity has taken out insurance to indemnify against defaults by trustees or officers this should be detailed in a note.

Where your organisation makes a transaction involving a trustee it must be disclosed in the accounts. Where the transaction is material and is with a connected person it must also be disclosed. A connected person is generally someone who has a form of control over the charity and extends to cover some of their relatives.

A note must be given which analyses the amount and nature of the expense and the number of trustees reimbursed. Where trustees have received no reimbursement this should also be stated.

The total remuneration, benefits in kind and average number of employees for the year should be disclosed. Where employees earn £60,000 per annum or more this needs to be disclosed in bands of £10,000. Staff costs in total need to be disclosed and this includes staff seconded and for whom the charity may not necessarily pay the wage bill.

Where these are not made within the primary objects of the charity then the value of the payment or benefit should be disclosed.

Details need to be given about any revaluations or estimates used. In addition the historic cost should be shown.

Details should also be given of any capital commitments, contingent liabilities, loans secured on charity assets and any monies paid to your auditor/examiner.

These disclosures are in addition to the ones traditionally used in the accounts, eg. fixed assets note. You may also be required to make further disclosures under other relevant pieces of legislation such as the Companies Act 1985 and 2006.