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What are the latest issues affecting the charity sector?

Carol Rudge Carol Rudge

While everyone is understandably focused on Covid-19, there continues to be changes happening around the regulation and governance of charities. Carol Rudge explores what these are, from regulations around climate change and Brexit to tax and VAT developments.

For a more in-depth look at how these may affect your organisation and financial reporting, see our charity sector developments report. [ 2805 kb ]

At the start of a new decade, significant issues, including climate change, Brexit and cyber security, will be high up board agendas. These issues are likely to have an impact on most organisations and, therefore, it is expected that these will also be reflected in financial statements, particularly in the area of narrative reporting.

Charity sector reporting guidelines

With increasing reporting requirements for large companies, including charities, there is additional need to address climate issues. The Streamlined Energy and Carbon reporting (SECR) regulations require large charities to disclose their energy
and carbon emissions in their annual reports, and The Companies (Miscellaneous Reporting) Regulations 2018 now requires a more overall assessment of an entity’s impact on the environment. The public are looking at the charity sector more than ever to provide concrete action and direction on climate change, and therefore, we expect to see a significant increase in focus and reporting in this area.

With regards to Brexit...

We have now left the EU, but the impact this may have is still unclear. Therefore we advise all organisations to continue their contingency planning, both in the short and long term, with a particular focus on the potential impact Brexit may have on funding, employees and other key stakeholders.

Clarity from the SORP and Charity Commission

While there have not been major changes to charity financial reporting overall, both the Statement of Recommended Practice (SORP) making body and the Charity Commission have responded to the desire of their key stakeholders for simpler and clearer guidance. The SORP-making body has combined the update bulletins into the new SORP, resulting in users only having to refer to one document. Meanwhile, the Charity Commission have updated their guidance in a number of areas to ensure the key messages are easily identifiable, as well as creating an external scrutiny benchmark to allow for a more consistent approach to reviewing charity accounts, and to set out the minimum standards expected.

There have been some legal rulings to contend with in the world of pensions, as well as an increase in contribution rates for the Teachers’ Pension Scheme. These combined with a number of tax and VAT-related developments mean there is plenty for the sector to navigate through over the coming year, and it is important to assess what impact these developments may have on your organisation.

The charity sector developments report aims to give you an overview of the topics mentioned above, as well as some other current hot topics relevant to the sector.

Download the report [ 2805 kb ]

If you would like to discuss this further, get in touch with Carol Rudge.

Download our report on charity sector developments