Hunts Forum’s Finance Manager Louise Prosser explains what to consider when preparing financial reports to reflect the impact of Covid-19
Many organisations will be approaching March year-ends or will be in the process of preparing year-end accounts and reports. There are several ways your accounts and Trustees’ Annual Report may need to reflect the effects of Covid on your organisation.
Reporting the impact of Covid in the Trustees’ Annual Report
- The narrative you need to include should be proportionate to the impact of Covid on your organisation and the risks faced by the charity
- You may need to include:
- The impact on fundraising
- Any changes in activities or demand for services
- Support given to beneficiaries
- Any change in the contribution of volunteers
- Future aims and objectives
- Any updates to your reserves policy
- The financial sustainability of the organisation and any long-term impact
- Any uncertainty around Going Concern
Reporting under SORP
For those preparing accounts under the Charity Commission’s Statement of Recommended Practice (SORP) you may need to consider the following:
- Income recognition – income should be recorded when it is probable, reliable and measurable. Think about whether there have been any changes in grant conditions that may affect this.
- If you have received income for events that have been postponed, it may need to treated as deferred income in your accounts. Also, ensure any refunds given have been correctly accounted for.
- Check your treatment of any CJRS grants received, including any due for the last month of your financial year.
- Have any restricted funds been repurposed, with the permission of those giving the grants or donations? If so, this will need to be explained in the notes to the accounts.
- Annual leave carried over by staff needs to be accrued in the accounts. This may be more common this year that in the past.
- Going Concern – your auditor or independent examiner will need evidence up to the date the accounts are signed to show that this is a suitable basis on which to prepare them. This may be budgets or funding agreements to show the organisation can continue for the coming year.
Other things to note
- With audits and independent examinations being carried out remotely, be prepared for things to take slightly longer this year.
- Accounts still need to be filed with the Charity Commission within 10 months of the year end, unless you contact them for an extension.
- For year ends between 27 June 2020 and 5 April 2021 the Companies House filing deadline has been extended from 9 to 12 months.