ACCOUNTING AS GOOD STEWARDSHIP

1
ACCOUNTING AS GOOD STEWARDSHIP

• Shane Cowley
• LP Financial Trustees Limited

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OBJECTIVE OF PRESENTATION

• To consider the key accounting / financial
  reporting issues that are likely to emerge upon
  the introduction of specific legislation for
  Irish based Charitable Organisations associated
  with Religious Congregations
• New reporting requirements will put a public face
  on private endeavours

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CANON CIVIL LAW STRUCTURES

• Your Congregation is one entity in Canon Law
• No Resources owned by the Congregation
• All Resources held in trust by recognised legal
  entity or Canonical Body in various jurisdictions
  
• gtAll held for the benefit of the
• Mission of the Congregation

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EXISTING REQUIREMENTS

• Revenue Commissioners grant CHY Number
• Funds applied for Charitable purposes only
• Maintain proper financial records and accounts
• Details of Activities undertaken (Your Mission)
• If overall income in excess of 50,000 accounts
  must be audited
• Approval from Revenue Commissioners required
• to change Governing Instrument
• to accumulate funds

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EXISTING PRACTICE

• Various Interpretations applied
• Many have more than one CHY number
• Many accounts not audited
• Accountants Compilation report
• If audited
• Non statutory audit unless for a Corporate
  Structure
• Some based on Statement of Recommended Practice
  (SORP 2000)

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IMPACT OF NEW LEGISLATION?

• Likely Requirement for Corporate Structure(s)
• Governing Instruments reflect your Constitutions
• Statutory Requirement for Annual Reports
• Audited Financial Statements
• Trustee Report
• Public availability?
• Dual Reporting Requirements?
• Companies Office?
• Charity Commission (Caradas)?
• Need to consider impact on existing structures
  and relationships within Congregation

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WHAT DO YOU NEED TO DO?

• To consider the scope of your activities vis-a
  vis
• Congregation Structures
• Province or Region
• Community
• Congregation Ministry(s)
• Review existing use of your CHY number(s)
• Determine appropriate legal structure(s)
• Consolidated approach?
• Separation of Ministry(s)?
• Develop suitable administration and financial
  management structures to ensure appropriate
  reporting of your activities

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FUTURE REPORTING

• Charities SORP 2005 will require
• Statement of Financial Activities
• Incoming Resources
• Resources Expended
• Summary Income and Expenditure Account
• Balance Sheet
• Recognised Assets and Liabilities
• Cashflow Statement
• Notes
• Accounting Policies
• Additional Information
• Trustees Annual Report

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INCOMING RESOURCES

• Voluntary Donations from members of Congregation
• Based on interpretation of Revenue Commissioners
• Income from Ministry Activities
• Investment Income
• Interest Receivable
• Income from Property Holdings

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APPLICATION OF RESOURCES

• Need to ensure that at all times funds are
• applied for the purposes intended and
• that such purposes are in accordance with the
  objects of the organisation and
• that they are always of a charitable nature.

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APPLICATION OF RESOURCES

• Direct Support of Ministry Undertakings
• Support of other works that are in keeping with
  your objectives
• Legitimate costs of administering your Charity
• Education and Training of those who support your
  mission
• Care and Welfare of those who work, or have
  worked, in the achievement of your mission

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BALANCE SHEET

• Assets
• Fixed assets (Property)
• Financial assets
• Current Assets
• Liabilities
• Current Liabilities
• Long term Liabilities
• Restricted Funds
• Designated Funds

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REGISTRATION OF PROPERTY

• Variation in approach
• Properties held in individual names
• Use of trustee company
• Essential to clarify title to property for audit
  purposes
• Will require legal documentation
• Recommend development of Property Register
• Including fixtures and fittings
• Religious Artefacts
• Applicable Restrictions or Conditions of Use
• Deals with issue of valuation of property
• Treatment of property assets will require careful
  consideration

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PROPERTY CATEGORIES

• Convents or Monasteries
• Stand alone
• Integrated with Institutional Ministry Property
• Large Community Residence
• Care Facilities
• Domestic Style Properties
• Institutional Ministry Properties
• Schools
• Hospitals
• Nursing Homes
• Voluntary Centres
• Other Properties and Land holdings

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VALUATION OF PROPERTY

• Property traditionally held for Community or
  Ministry
• Valuation not really an issue, to date
• Variation in approach (Again)
• SORP recognises different uses of property and
  that different valuation bases can apply
• Historic Cost
• Functional Use Value
• Market value
• Objective is to reflect fair value

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DESIGNATED FUNDS

• Internal Designation of Funds for future use
• Ministry(s) Projects
• Care and Welfare Needs
• Property
• Basis of Designation must be
• Reasonable
• Consistent

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RESTRICTED FUNDS

• Funds that have a legally binding restriction on
  their use e.g.
• Donation
• Bequest
• Not part of general reserves of Charity
• Need to be shown separately within Financial
  Statements

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TRUSTEES ANNUAL REPORT

• Charity SORP recommends inclusion of
• Reference and Administration Details
• Structure, Governance and Management
• Objectives and Activities
• Achievements and Performance
• Financial Review
• Plans for future periods
• Major impact on Charity accountability in UK

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REPORTING OF RESOURCES

• Ensure that all reports appropriately reflect the
  resources of, and their use by, the Charitable
  Organisation(s) associated with your Congregation
• Need to raise awareness within Congregation
  firstly
• Communication with members vital
• Changing Picture within Congregations
• Demographics
• Financial Resources
• Nature of Ministry Involvement
• Property Profile

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SUMMARY

• Public Reporting will become the norm
• Your use of resources will be questioned
• Need to review your existing organisation
  structure
• Within Congregation
• With your ministries
• Appropriate financial management and
  administration structures are vital
• Clear policies for holding and use of resources
• Assessment of need current and future

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OTHER ISSUES

• Potential conflicts between Canon and Civil Law
• Trustees responsibilities
• Congregation Leadership
• Impact of cross border activities
• Cultural change
• Adjusting to the regulation and monitoring
• Preparation of accounts and annual report

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NOTHING TO FEAR

• Positive experience in UK and other jurisdictions
• Initial Concerns
• Overall Very Positive Impact
• Long term benefit to all involved
• Careful planning and discernment of what is most
  appropriate for your circumstances is vital