Charity technical briefings has been saved
Article
Charity technical briefings
Accounting considerations related to the Coronavirus 2019 (COVID-19) pandemic
The coronavirus 2019 (COVID-19) pandemic is affecting economic and financial markets, and virtually all industries are facing challenges associated with the economic conditions resulting from efforts to address it. For example, many charities have seen sharp declines in revenues due to the closure of retail outlets or from the cancellations and delays in fundraising events due to regulatory and organisational mandates (e.g. “shelter in place” mandates, school closures) and voluntary changes in consumer behaviour
(e.g. “social distancing”).
The continuation of these circumstances could result in an even broader economic downturn, which could have a prolonged negative impact on the country, both increasing the need for charitable operations and increasing the challenge of fundraising and delivery. This briefing highlights some of the financial accounting and control impacts that trustees will need to consider.
Summary of useful links
- The Charity Commission for England and Wales (CCEW) set up a web page on 19 March 2020 to provide additional guidance for charities, https://www.gov.uk/government/news/coronavirus- covid-19-guidance-for-the-charity-sector. This was updated and re-issued 7 April 2020 and now includes more information on government funding and support available to charities.
- CCEW’s approach to regulation during this uncertain period will be as flexible and pragmatic as possible in the public interest, whilst helping trustees to be aware of and think about the wider or longer impact of their decisions on their charity.
- Specific guidance for charities and trustees on the accounting implications was issued on 23 March and can be found on the SORP microsite. This includes considerations around going concern and the disclosure of post balance sheet events, as well as the accounting for income, contracts and commitments.
- Guidance from the Financial Reporting Council (FRC) which includes guidance for companies and auditors can be found at https://www.frc.org.uk/about-the-frc/covid-19 and addresses some of the difficulties companies currently face in making forward-looking judgements in their financial statements.
- The government has set out a number of measures to support individuals and organisations in this crisis. A summary of these can be found at https://www2.deloitte.com/uk/en/pages/financial- advisory/articles/covid19-uk-government-funding-response.html.
- Guidance for charities registered in Scotland was published by the Office of the Scottish Charity Regulator (OSCR) on 30 March and is available at https://oscr.org.uk/guidance-and-forms/covid- 19-guidance-for-charities/.
- General accounting guidance for all types of companies can be found in the Deloitte summary https://www.iasplus.com/en-gb/publications/uk/need-to-know/2020/need-to-know-coronavirus.
Recommendations
Charity technical briefings
Charities with a connection to a non-charity
The world remade by COVID-19
Recover: Planning scenarios for resilient leaders