Charity accounts and COVID-19 reporting

Rebecca Frost
Charities, COVID-19

As more and more charities look to finalise their 2020 accounts, it is inevitable that the implications of the COVID-19 pandemic will have had an impact in some way on the charity’s activities and financial position, which will need to be appropriately reflected in the financial statements.

The Charities SORP committee published a useful guide back in March, with pointers as to what charities should look to include as additional disclosures where relevant. The guide can be found here.

Key areas for disclosure include:

Trustees reporta number of potential disclosures should be considered here including -

  • how the virus control measures affected the charity’s activities (best included in achievements and performance)
  • the implications for the charity’s operations and activities for the coming year and the future aims and activities of the charity (best included in plans for the future)
  • the financial effects of the pandemic, including a discussion of any government or similar support that the charity has accessed, and explaining any financial uncertainties regarding the charity’s financial sustainability and consideration of going concern (best included in financial review)
  • how the financial and operational effects of the virus affected the principal risks and uncertainties facing the charity during the reporting period
  • the impact on the charity’s reserves policy

Going concern accounting policythis will need to be amended to reflect that the trustees have taken into account the impact of COVID-19 on their assessment of going concern, and can link back to the financial review if required. Consideration should be given to information from budgets and forecasts, taking into account available unrestricted funds and reserves, credit facilities such as overdrafts, and any other forms of financial assistance available to the charity.

Post balance sheet event note - appropriate for year ends prior to 31 March 2020, where at the date of the balance sheet the impact of the pandemic was unknown. This could include discussion of non-adjusting events such as material losses in the values of assets/investments subsequent to the reporting date.

The Charity Commission have issued guidance on the reporting of serious incidents during the pandemic with examples of what is and isn’t reportable by charities. In addition they have confirmed that where a modified opinion, emphasis of matter, or a matter identified by the independent examiner is solely due to the exceptional circumstances affecting the conduct of the audit or the independent examination, then this is not considered to be reportable as a matter of material significance to the charity regulator. More information can be found here.

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