Mha Plc · LSE:MHA
Mha — Charity Financial Reporting webinar, 9 November 2021
41 slides from Mha's conference presentation, Nov 9, 2021
Slide 1: Charity Financial Reporting: An essential update
WEBINAR | 9 NOVEMBER 2021 Charity Financial Reporting An essential update
Slide 2: Welcome
Welcome Sudhir Singh Head of MHA Not for Profit, Partner There will be a Q&A session at the end of this webinar to address any specific questions you have. Please submit your questions via the Q&A button, located at the bottom of your screens. A recording of this webinar and copy of the slides will
Slide 3: Speakers
SPEAKERS Stuart McKay Rich Hall Not for Profit Head of Sustainability and specialist, Stakeholder Assurance, Partner, MHA Partner, MHA Paul Winrow Jim Clifford, OBE Technical Partner, Director & CEO, MHA Sonnet Advisory & Impact
Slide 4: Agenda
Agenda • IFR4NPO Consultation - Paul Winrow • Charity SORP Consultation - Stuart McKay Major changes are anticipated in charity financial reporting, • Best practice in impact & sustainability both in the UK and reporting internationally. - Rich Hall & Jim Clifford • Q&A
Slide 5: IFR4NPO Consultation - an update
SECTION 1 IFR4NPO Consultation - an update Paul Winrow, Technical Partner, MHA
Slide 6: Developing international financial reporting guidance for non-profit organizations
IFR4NPO CONSULTATION Developing international financial reporting guidance for non-profit organizations Assets Liabilities Reserves Income Expenditure Surplus www.ifr4npo.org
Slide 7: Objectives
IFR4NPO CONSULTATION Objectives • To improve the quality, transparency and credibility of NPO financial reports • To support the provision of NPO financial information that is useful for decision making and accountability, balancing the needs of preparers and users • To address specific NPO issues,
Slide 8: Which financial reports?
IFR4NPO CONSULTATION Which financial reports? Internal Reports Accounting Transactions Systems Donor Reports General Purpose Financial Statements (GPFS) Another project is working to IFR4NPO Project focus is GPFS, (and harmonise donor project accompanying narrative reports) report formats
Slide 9: Which stakeholders?
IFR4NPO CONSULTATION Which stakeholders? IFR4NPO Donor Reference Group Assets Donors, regulators, Financial statements clients, public Liabilities Users Reserves Non profit Preparers organisations Income Expenditure Independent Auditors assurance Surplus providers
Slide 10: What will IFR4NPO deliver?
IFR4NPO CONSULTATION What will IFR4NPO deliver? Solution The IFR4NPO Guidance Country and funder Current Problems adoption decisions Future Solutions • No international financial • Improved usefulness, reporting standards for NPOs transparency and consistency of • Inconsistent financial reports NPO
Slide 11: How we will deliver – advisory groups
IFR4NPO CONSULTATION How we will deliver – advisory groups Technical Advisory Group Practitioner Advisory Group (TAG) (PAG)
Slide 12: What will be delivered and when?
IFR4NPO CONSULTATION What will be delivered and when? • Consultation Paper – structured stakeholder Phase 1 input, January 2021 • Exposure Draft - draft guidance for public Technical Phase 2 comment, Sep 2022 rigour • Final Guidance – ready for adoption, early 2025 Stakeholder Phase 3 engagement • T
Slide 13: Engagement map
IFR4NPO CONSULTATION Engagement map
Slide 14: Where are we now?
Closed Where are we now? 7 Oct 21 Surgeries to support respondents 5 webinars on Part 2 Outreach on Part 1 – 12 regional roundtables Consultation Paper launched 28 Jan 21
Slide 15: CP engagement & response
IFR4NPO CONSULTATION CP engagement & response Events: 965 people from 96 countries Responses: 208 (21% orgs, 79% individuals)
Slide 16: Audit firm engagement
IFR4NPO CONSULTATION Audit firm engagement Responses from • MHA • Baker Tilly Ecuador • RSM • Individuals in two individual firms in Ghana and Georgia
Slide 17: Next steps
Next steps Analysis of Issue Consultation Finalise the response response Jan 2022 roadmap
Slide 18: IFR4NPO roadmap
IFR4NPO CONSULTATION IFR4NPO roadmap Dependencies on updates to IFRS for SMEs Standard and IPSASB standards ! Consultation Final summary ---------- Exposure draft ---------- Guidance Jan Sep May Nov Apr 2022 2022 2023 2023 2025 3 month ED 3 topics Response Part 1 period 3 month ED 3 topics Response
Slide 19: What might the guidance look like?
IFR4NPO CONSULTATION What might the guidance look like? Replacement/ new sections Non-exchange revenue IFRS for Grant expenses Sections not SMEs relevant to NPOs Standard Reporting entity e.g. distributions Fundraising Costs Narrative reporting
Slide 20: Charity SORP Consultation - an update
SECTION 2 Charity SORP Consultation – an update Stuart McKay, Partner, MHA
Slide 21: The planned SORP development process
CHARITY SORP CONSULTATION The planned SORP development process
Slide 22: The expected timeline
CHARITY SORP CONSULTATION The expected timeline Stage Approximate Completed by earliest timing time (latest timing) Exploration 3 to 6 months June 2020 (September 2020) Reflection 3 to 6 months September 2020 (March 2021) Problem solving 3 to 6 months December 2020 (September We are here 2021) Draft
Slide 23: The new SORP engagement process – why the delay?
CHARITY SORP CONSULTATION The new SORP engagement process – why the delay? Preparers from smaller charities Major funders Academics & Trustees & independent & donors regulators examiners Set the agenda for discussion and debate within committee SORP making SORP body committee Considers how needs and
Slide 24: Exploration phase - complete
CHARITY SORP CONSULTATION Exploration phase - complete TAR • Readability and information content • Link between TAR and FS’s is weak • More focus on telling the story • Summary sheet of key facts Financial Statements • Reserves are misunderstood by preparers and readers • More disclosure on going co
Slide 25: Revised timetable – what next?
CHARITY SORP CONSULTATION Revised timetable – what next? • FRS102 is being revised and will be issued in 2023 wef a/c periods starting 01/01/2024 • New SORP needs to be published October 2023 • Drafting needs to be complete by December 2022. • Reflection and problem solving should be combined and co
Slide 26: Does size matter?
CHARITY SORP CONSULTATION Does size matter? Tiering approach • SORP Committee concluded that a clear case was made for moving away from two strands • key to ensure that the lowest tier of reporting had the lightest reporting burden • accepted that a third tier was now needed for the very largest cha
Slide 27: Reflection & problem solving
CHARITY SORP CONSULTATION Reflection & problem solving 15 topics – to be completed by 10 January 2022 1 Summary financial information/key facts page 2 Impact reporting (the difference a charity makes) 3 Sustainability reporting 4 Reserves 5 Support costs 6 Expenditure classification 7 Activity repor
Slide 28: Problem solving
CHARITY SORP CONSULTATION Problem solving Live issues • RPTs and Redundancy disclosures – can be problematic as sometimes NDA’s have been signed • Grant expenditure disclosures could be simplified and grouped (website disclosures can go out of date) • Legacy recognition – using a more prescriptive m
Slide 29: Charity Reporting
SECTION 3 Charity Reporting Rich Hall, Head of Sustainability and Stakeholder Assurance, Partner, MHA v Jim Clifford, OBE Director & CEO Sonnet Advisory & Impact
Slide 30: Introduction
CHARITY REPORTING Introduction Major development in two particular arenas • Impact Reporting • ESG – Environmental, Social & Governance
Slide 31: What's the difference?
CHARITY REPORTING What’s the difference? ESG Reporting • Focuses on explaining and measuring the efforts an organisation makes to reduce and address its environmental, and social risks across its operations and supply chains, and the governance over such. Impact Reporting • Focuses on the change - i
Slide 32: Impact reporting – what's happening?
CHARITY REPORTING Impact reporting – what’s happening? • Impact…Social – what do we mean ? • Resources – GECES; G8; Impact Management Project • Organisations are: - Articulating what, how and for whom - Identifying stakeholders in that change - Building frameworks • Be proportionate • Delivery – lea
Slide 33: Impact - articulating the value
CHARITY REPORTING Impact - articulating the value Leading the way: the role and value of nurses in general practice How Safe Families’ approach changes lives Effectiveness of the national online self-exclusion scheme
Slide 34: ESG reporting – what's happening
CHARITY REPORTING ESG reporting – what’s happening • Increased scrutiny and analysis • Pressure from investment community • Increase in both compliance and voluntary reporting • Evolution and development across each strand E S G
Slide 35: ESG reporting – what's happening; TCFD
CHARITY SORP CONSULTATION ESG reporting – what’s happening; TCFD Actual and potential The organisation’s Governance impacts, risks and governance around opportunities on the climate-related risks and organisation’s business, opportunities. strategy and financial Strategy planning. Risk The metrics a
Slide 36: An example of ESG reporting from the social sector
CHARITY REPORTING An example of ESG reporting from the social sector …engaging with funders, commissioners, delivery partners • Three areas of eight indicators • Meets SRS in all aspects, but goes beyond it where relevant to Hyde’s targets and places • Builds an internal benchmarking and decision ma
Slide 37: Impact reporting - considerations
CHARITY REPORTING Impact reporting - considerations • Clear and engaging explanation of how we do what for whom • Framework of relevant outcomes aligned to needs • Situational analysis • Metrics matched to outcomes • …but what about: - SDGs ? - Stories ? - £ evaluations ? - Publish separately or in
Slide 38: ESG reporting – what's happening?
CHARITY REPORTING ESG reporting – what’s happening? • Audience - Investors - Media / social media - Commissioners - Corporate partners - Wider stakeholders • Methodology can be as important as outcomes • Needs to be proportionate • How should it look…what should it cover ? • Do fewer things well!
Slide 39: The opportunity to engage through your reporting
CHARITY REPORTING The opportunity to engage through your reporting • Will you articulate your value ? • Will you explain your ESG strategy?
Slide 40: Questions?
Questions?
Slide 41: Now, for tomorrow
mha-uk.co.uk @MHA_UK MHA-UK Now, for tomorrow
MHA — Charity Financial Reporting webinar, 9 November 2021 on 6ix