CFDG Launches Major Project to Improve Consistency of Charity Reporting

7th May 2003

The Charity Finance Directors' Group (CFDG) has today set out a bold new initiative to improve inputs into charity annual reports. The project will play a vital part in improving the quality and consistency of charity annual reports and as such, will help charities move on to more accurate output and outcome measures. The new work has been funded by the LloydsTSB Foundation.

CFDG plan to develop input work on:
· Support Costs and Management and Administration Costs
· Fundraising costs
· Valuing of volunteers

Working Groups will be created to consider each of these issues and aid the development of a Report, scheduled for publication in September 2003, which will contain guidance on how input costs should be shown within charity accounts that are fully SORP compliant. It is anticipated that the Report will contribute to the next annual SORP review.

CFDG have set up a project team chaired by Les Jones OBE (WWF Deputy Chief Executive) and comprising Shirley Scott (Chief Executive, CFDG), Ray Jones (Policy Accountant, Charity Commission), Pesh Framjee (Head of Non Profit Unit at Deloitte & Touche and CFDG Special Advisor) and David Sinclair (Policy Officer, CFDG).

After competitive tender CFDG have appointed Mary-Lou Wedderburn, a chartered accountant, to project manage the work and coordinate the production of the report. Mary-Lou is a practising accountant who was formerly the audit specialist in the Technical Department of the Association of Chartered Certified Accountants (ACCA). While at ACCA she acted as technical secretary to the APB working party that developed Practice Note 11, The audit of charities. More recently she has provided technical services on a consultancy basis to the ICAEW (the Institute of Chartered Accountants in England and Wales), developing professional material and preparing formal responses to consultative documents, including a submission to the Strategy Unit report 'Private Action, Public Benefit'.

Mary-Lou will be aided by support from the Charity Commission, who have offered to provide technical secretaries for two of the Working Groups and by Nigel Scott, an experienced charity Finance Director and Trustee of several organisations who will use his direct knowledge to develop illustrative examples to support the text.

CFDG Vice Chairman, Les Jones OBE (Deputy Chief Executive at WWF) said "The issue of the use of financial information to compare charities is inevitable and whilst there are many limitations to any such comparison it is clearly going to happen. CFDG are therefore keen to ensure that the financial information provides enough of the right data to assist in this process. We will not be able to move on to meaningful comparisons until we are sure that we have got right the consistency and acceptance of fundamental principles of accounting for the inputs. This will in turn assist with the all important measurement of outputs, outcomes and impacts."

Ray Jones, Policy Accountant at the Charity Commission said: "The Charity Commission welcomes this work as a positive step in the further development of consistent accounting approaches to input measurement and cost allocation. These issues underpin financial comparability which are at the core of the SORP's role and will provide valuable and informed input into the next annual review of the SORP."

Notes:

1. The provision of meaningful financial information provision for peers, the public and regulators by charities is increasingly becoming a major debating point in the sector. There is a need for charities and other not for profit entities to provide comparable financial information, although there is understandable opposition to the development of what could be seen as league tables.

2. Under the SORP (Statement of Recommended Practice), financial information is not currently comparable and it is not always easy for stakeholders to understand. As the sector gets more involved in public service provision, and as it continues to raise money from the public, the demands for comparable financial and outcome information is likely to increase.

3. In response to the debate, a number of the charity umbrella organisations have begun some work on 'measuring success'. NCVO hosted a meeting to bring the sector together to discuss the issues around Measuring Success. On 11th June 2002 the CFDG Policy Development Working Group discussed their concerns and agreed to hold a consultation meeting on 26th June for interested members. On 1st July 2002, CFDG invited key sector representatives to attend a workshop meeting to highlight CFDGs' ideas for taking things forward.

4. The recently published 'Strategy Unit' report set out the need for the next charity SORP to 'develop improved methods for apportioning costs and expenditure, enabling more meaningful financial comparisons between organisations to be made'. Our proposed work will begin to tackle some of the toughest issues in this area and encourage voluntary adoption of good practice.
5. In December 2002, the Lloyds TSB Foundation agreed to provide some funding to enable CFDG to lead on this work and produce good practice guidance.

  • Email
  • Twitter
  • Facebook
  • Linkedin

© Charity Finance Group / © Charities Resource Network / Registered Office: 15-18 White Lion Street, London, N1 9PG.
A Company Limited by Guarantee. Registered in England No. 3182826, Registered Charity No. 1054914, Registered VAT No. 945 6038 09.