Disclosure of trustees and staff remuneration, related party and other transactions
August 4, 2015
Welcome to our series on SORP 2015 where the specialist charities and not for profit team at Chiks bring you bite size guidance on the changes that SORP 2015 will bring to your organisation.
The new SORP and its predecessors recognised that the disclosure of certain transactions is important within a charity for stewardship purposes and also for providing assurance that the charity is operating for the public benefit and that its trustees are acting in the interests of the charity and not for private benefit.
The new SORP requires that disclosures must be made for transactions involving trustees, de-facto trustees, related parties, staff remuneration and ex-gratia payments and must always be regarded as material regardless of size.
Much of this is not new, but the new SORP provides more detailed guidance to address issues that have arisen since the last SORP issued in 2005.
The main change that will affect charities is the disclosure relating to key management personnel. Previously charities only disclosed higher paid charity personnel pay, i.e., employees earning over £60,000 per annum.
The new SORP will require charities to identify who key personnel are. For example in larger charities this could be the CEO and members of the senior management team, in smaller charities it could be only the operational manager.
Other significant changes include the total amount of expenses waived by trustees, details of redundancy and termination payments and the total amount donated to the charity by Trustees.
The section relating to these transactions is set out in section 9 of SORP 2015 (section 33 of FRS 102).
A summary of the areas covered in the guidance is detailed below:
• Trustee remuneration and benefits
• Trustee expenses
• Transactions with related parties
• Audit, independent examination and other financial services fees
• Ex-gratia payments
• Staff costs and employee benefits
• Remuneration and benefits received by key management personnel
Charities will need to work with the SORP guidance, their trustees and their external advisers in order to ensure that they can demonstrate they are compliant with the legislation, working for the public benefit and all transactions are transparent.
To discuss this further or if you require any assistance on any of the articles in our SORP2015 bite sized guidance series, please contact a member of our dedicated charities and not for profit team.