Irish Chrities Tax Reform Group

Conference

9 November 2005

Presentation byLorcan Colclough, ACA

Partner, Mazars

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Introduction

Regulation is long overdue

Sector will benefit

3

Focus of legislation should deal with

Definition of a Charity and charitable purpose

Register of Charities

Appropriate regulatory framework

4

Balanced legislation

Balance between proper accountability and allowing Charities to continue to be dynamic and without undue bureaucracy

5

SORP

Statement of Recommended Practice (SORP) - Accounting and Reporting by Charities

Charities Commission in the UK / Accounting Standards Board (ASB)

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Role of SORP

Key role to play.

Objectives of SORP.

Who does it apply to?

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Charity accounts should comprise:

Statement of Financial Activities

Income and Expenditure Statement (in certain cases)

Balance Sheet

Cashflow Statement (in some cases)

Notes to the accounts

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Trustees Annual Report

Reference and administrative details

Strategic governance and management

Objectives and activity

Achievements and performance

Financial review

Plans for the future

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Funds of a Charity

Funds of a Charity

Unrestricted Income Funds Restricted Funds / Special Trusts

General Endowment (Capital)IncomeDesignated

Expendable Permanent

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Accounting Policies

Incoming resources policies

Resources expended policies

Asset policies

Fund Structure Policies

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Filing of Accounts

In the UK they have to be filed with Charity Commission

Similar regime anticipated in Ireland

SORP is likely to be mandatory

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One Size Fit All

No

Important that thresholds are correctly set

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UK Thresholds

Preparation of accruals accounts

Gross income is greater than:

• England and Wales £100,000 (€150,000)

• Scotland £25,000 (€37,000)

No concession for small charitable companies

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Audit Threshold for Charities

Gross income is greater than:

• England and Wales £250,000 (€365,000)

• Scotland £100,000 (€150,000)

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Financial Reporting Standard for Small Entities (FRSSE)

Further exemption for Charities who prepare accruals accounts and audited accounts

Two of three conditions:

UK

Turnover £5.6m (€8.25m)

Balance Sheet Total £2.8m (€4.1m)

Employees 50

Ireland has much lower FRSSE exemptions

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Conclusion

Regulation is needed

Regulation is to be welcomed by Sector

Most Charities are well prepared

SORP is likely to be mandatory

Correct exemption limits are needed

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