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NCVO/CFG webinar: Financial management during covid-19 – top tips and scenario planning

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Watch the recording at: https://www.youtube.com/watch?v=nblQLNpzIfU

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NCVO/CFG webinar: Financial management during covid-19 – top tips and scenario planning

  1. 1. Financial management during COVID-19 Richard Sagar Policy Manager Charity Finance Group policy@cfg.org.uk
  2. 2. Funding for the charity sector https://www.gov.uk/guidance/financial-support-for-voluntary- community-and-social-enterprise-vcse-organisations-to-respond-to- coronavirus-covid-19
  3. 3. Coronavirus Community Support Fund - £200 million https://www.tnlcommunityfund.org.uk/fundin g/covid-19/learn-about-applying-for- emergency-funding-in-england
  4. 4. Coronavirus Support Finder https://www.gov.uk/business-coronavirus-support-finder
  5. 5. Covid-19 update webinar, co-hosted by NCVO and CFG Update from the Commission 27 May 2020 Nigel Davies, Assistant Director Accountancy Services
  6. 6. Charity Commission COVID-19 update In these uncertain and challenging circumstances the Commission looks to be as supportive as we can be and to play our part in assisting the charity sector. Through this time the Commission continues to be ‘open for business’ • Look firstly at where we can help • Secondly consider relevant advice and guidance • Close with developments in hand
  7. 7. Where we can help
  8. 8. Charity filing - Flexibility in our handling of late filing The disruption due to controls on travel and face to face meetings will affect the preparation and approval of charity annual reports and accounts, and the external scrutiny of them. Charity law provides for the 10 month filing period and we have no discretion: • Talk to us as soon as you identify a problem • E-mail direct to the dedicated team: filingextension@charitycommission.gov.uk giving charity name and registration number and we will see how we can accommodate delayed filing
  9. 9. Hosting your AGM and trustee meetings electronically • Some charities have clauses in their governing documents that allow them to meet virtually or to use telephone facilities. • This is particularly important if not holding your AGM may make it difficult for you to finalise your annual reports and accounts. • If not, check your governing document and see if you can make amendments to facilitate changes as to how or when meetings are held. • Where there is no such clause in your governing document and you decide to hold meetings over the phone or using digital solutions, we will understand but you should record this decision and that you have done this to demonstrate good governance of your charity.
  10. 10. Charity Objects and restricted funds - Understanding if you can help with the Covid-19 efforts Lots of charities are considering whether they can help the effort to tackle COVID-19 and its severe impact on people right across the country • You first need to understand your charities existing charitable objects as set out in your governing document and the structure of your charity’s funds • Charities with non related objects may still be able to support the Covid-19 response • Understand restrictions against your charities objects. For example, serving a particular region • You may be able to adapt or change your objectives as long as they are reasonable- in certain circumstances we can assist
  11. 11. Our advice and guidance
  12. 12. Charity Commission guidance:  Dedicated page: https://www.gov.uk/guidance/coronavirus- covid-19-guidance-for-the-charity-sector  12 topics currently covered, including: Amending objects Use of reserves Flexible approach to late filing On-line AGMS and meetings Reminder to report serious incidents including on-line fraud and financial difficulty Safeguarding Working with non-charities
  13. 13. Keeping people safe and reporting serious incidents Reporting Serious Incidents Keeping people safe • It is ultimately the responsibility of the charity trustees to continue to report serious incidents using our current guidelines, and we will continue to ask trustees to use their judgement in deciding whether an incident is significant in the context of their charity and should be reported to us. • It’s important that during this pandemic we continue to take care of our most vulnerable people, we ask anyone with concerns about someone in a charitable environment to review our safeguarding guidelines and take the necessary steps to inform the Commission of your concerns.
  14. 14. Working with a company or business to help with Covid-19 efforts. Charities can work with non-charitable companies or businesses in a number of ways. For example, you could: • Provide a service or run a project together • Have staff seconded or volunteering for your organisation • Enter into a commercial partnership to raise funds (for example, a company donates a percentage of sales and uses your charity’s name on their promotional material) You should: • Make sure that linking with a business for this purpose is in your charity’s best interests and that your trustees support it • Ensure that any activities you carry out fit with your charity’s purposes • Identify, address, and review risks as well as benefits • Consider any conflicts of interest or risks to your charity’s reputation
  15. 15. Charity Commission guidance:  Other updates on our site for: Guidance for examiners to carry out an independent examination: https://www.gov.uk/government/publications/independent- examination-of-charity-accounts-examiners-cc32 Updated guidance for auditors and examiners on reporting matters of material significance: https://www.gov.uk/government/publications/guidance- for-auditors-and-independent-examiners-of-charities
  16. 16. Financial planning during Covid-19 Reserves can be spent to help cope with unexpected events arising from the Covid-19 outbreak Trustees are encouraged to think about the spend, projects and charity activities that can be stopped or delayed in order to focus on essential spending You should identify which of your funds or assets have limits on their use and investigate if you are able to reprioritise this funding Further guidance can be found on the Charity Commission Coronavirus (Covid-19): Guidance and Support page on GOV.UK
  17. 17. Developments in hand
  18. 18. Charity Commission guidance:  Updates in train for: Serious incident reporting Updating CC40 Charity emergency appeals: starting, running and supporting charitable emergency appeals CC8 Internal Financial Controls guidance Fraud alerts: https://www.gov.uk/government/news/coronavirus-covid- 19-increased-risk-of-fraud-and-cybercrime-against- charities
  19. 19. Gov.uk/charity-commission 0300 066 9197 Charity Commission for England and Wales @Chtycommission Contact us
  20. 20. Coronavirus: financial reporting issues for charities CFG/NCVO webinar 27 May 2020 Naziar Hashemi
  21. 21. © 2019 Crowe U.K. LLP | Confidential | 2© 2020 Crowe U.K. LLP Entitlement, Probability and Measurement The impact of coronavirus may require further consideration of these criteria for their different sources of income. • Coronavirus Job Retention Scheme – eligibility criteria, match with salary cost • Events – cancelled or postponed? Cancellation policy, conversion into donation • Donations and grants – likelihood of receipt, • Contracts – performance conditions, no cost extensions • Legacies – valuation, timing See FAQs on Income recognition https://www.crowe.com/uk/croweuk/insights/sorp- 2015-income-recognition Income recognition
  22. 22. © 2019 Crowe U.K. LLP | Confidential | 3 • Legal vs constructive obligations • Leases and onerous contracts • Pension liabilities • Gift Aid payments from subsidiaries • Finance covenants Think about Commitments & liabilities • Tangible and intangible fixed assets • Investments • Stock • Debtors Valuations & Impairments https://www.crowe.com/uk/croweuk/insights/covid-19-financial-reporting-charities
  23. 23. © 2019 Crowe U.K. LLP | Confidential | 4© 2020 Crowe U.K. LLP • An entity is a going concern unless the Trustees intend that the charity will cease its activities, or has no realistic alternative but to do so. In assessing whether the going concern assumption is appropriate, the Trustees are required to take into account all available information about the future, which is at least, but is not limited to, twelve months from the date when the financial statements are authorised for issue. • The Trustees’ assessment on ability to continue as a going concern is likely to be a key area of emphasis for boards and auditors • The Financial Reporting Council thinks it is likely that more companies will disclose ‘material uncertainties’ to going concern in current circumstances. Going Concern https://www.crowe.com/uk/croweuk/insights/covid-19-financial-reporting-charities
  24. 24. © 2019 Crowe U.K. LLP | Confidential | 5© 2020 Crowe U.K. LLP • Discussion of key impact of COVID-19 • Financial review and risks • Reserves policy • Going Concern • Future plans • Post balance sheet events • As up to date as possible Trustees’ annual report https://www.crowe.com/uk/croweuk/insights/covid-19-financial-reporting-charities
  25. 25. © 2019 Crowe U.K. LLP | Confidential | 6 Uncertain future with many possible impacts 1. Liquidity, cash and reserves management 2. Strategy & scenario planning 3. Governance & decision making 4. Risk management 5. Structures, operations and business models See: https://www.crowe.com/uk/croweuk/insights/non-profits- managing-in-uncertain-times Survive Adapt Collaborate Plan for success
  26. 26. © 2019 Crowe U.K. LLP | Confidential | 7 Link cash management with risk management & forecasting process Rethink reserves – Why are these held? What is the appropriate level? How should it be used? Think about the NOW and the FUTURE Liquidity and reserves How are cash requirements going to be managed. Are funds going to be obtained by borrowing, selling investments or drawing down on cash balances, cutting / deferring expenditure?
  27. 27. © 2019 Crowe U.K. LLP | Confidential | 8 The strategy must be able to deal with uncertainty Predicting the probable is difficult Develop tactics on the premise that several different outcomes are possible Strategic thinking

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