Charities that are also Companies
August 18, 2015
Welcome to our final instalment of the SORP 2015 series where the specialist charities and not for profit team at Chiks will bring you bite sized guidance on the changes that SORP 2015 will bring to your organisation.
A combined directors and trustees report can be prepared provided it includes all information required by the SORP module and applicable charity law. Charitable companies should ensure that the combined annual report makes it clear that is also contains a directors report as required by company law.
Charitable companies which are medium or large must also prepare a strategic report.
Income & Expenditure Account:
Charitable companies must prepare an income and expenditure account. The SOFA can be adapted to include an income and expenditure account, therefore a separate report is not required.
To ensure the SOFA meets the requirements of company law the combined statement must:
• Identify within the statements heading that an income and expenditure account is included
• Include a line identifying the amount of any tax on activities
• Identify the charity’s net income and expenditure for the reporting period
If a combined statement is not presented then a separate summary income and expenditure report must be produced, this is also the case for consolidated accounts.
Revaluation & Fair Value Reserve:
A revaluation reserve must be set up by charitable companies when assets are revalued upwards. A fair value reserve is also required for certain financial instruments when measured at fair value. These funds must be disclosed on the face of the Balance Sheet.
If you wish to discuss this further or if you require assistance with any of the articles in our SORP2015 bite sized guidance series, please contact a member of our dedicated charities and not for profit team.