Page 163 - Demo
P. 163
DO WE NEED TO EXPLAIN EVERY FIGURE IN THE ACCOUNTS?
The answer to this is “no”. This section of the report should comment on:
The nancial effect of signi cant events – for example, the sale of a property, the receipt of a very large lump sum pension, the provision of a large donation or grant, or a major change in the value of investments because of stock market volatility
Where the charity holds material investments, it should state its investment policy and what it hopes to achieve from holding investments. (This aspect is dealt with in more detail in chapter six)
Any factors that are likely to have an impact on the nancial performance or nancial position of the charity going forward – for example, age pro le, the decision to close or “hive off” a school, care home or project, the decision to dispose of a large property
The nancial review should also explain:
The principal sources from which the charity receives money
Where the charity’s money has been applied during the year
The charity’s policy for holding reserves, stating the amount of those reserves and why they are held (see below but also chapter four)
WHAT INFORMATION NEEDS TO BE GIVEN IN RESPECT TO THE CHARITY’S RESERVES POLICY?
This is best illustrated by giving a couple of examples and relating these examples back to the text and explanations given in chapter four, regarding
the need to provide for the care of members for the rest of their lives and the need to possibly continue the mission of the charity in to the long term through grant making (see chapter ve). However, a summary of the information needed is given below:
The amount of the total funds (or net assets) of the charity at the nancial year end
Identify the amount of any funds which are restricted and not available for general purposes at the end of the reporting period. This will often include monies raised speci cally for the institute’s overseas missions
Chapter 8 159
