How to Find Financial Expertise for Your Charity

Most people on charity boards would agree that it is useful to have someone with financial expertise also on the board, so that they can deal with the ‘finance stuff’. However, charities often struggle to recruit people with any financial know-how and charities can survive without this skill set, so does it really matter? In short, yes –  but let me explain why.

It saves money

Charities operate in a highly regulated environment, with very complex tax and accounting rules; having someone on the board who can help you navigate these will help avoid any accidental non-compliance, or unforeseen tax charges, which can save a lot of money.

Individuals with financial expertise will also be well placed to assist with the development of strategic aims of the charity, especially in relation to resources, as well as ensuring the effectiveness and robustness of the charity’s internal policies and procedures. Smaller charities in particular would benefit from this expertise as, often, they are too small to support a discrete finance function within the organisation.

In these smaller organisations the day-to-day bookkeeping is often be undertaken by an office administrator with little to no finance knowledge or training. In these circumstances, it would be especially important to plug this knowledge gap through financial expertise on the board. Ultimately the board is responsible for the charity’s finances, and it will always benefit the charity if there is someone on the board who will be able to identify potential financial risks, and ways of mitigating these risks.

Add financial expertise to your board

So, how do you find financial expertise for your charity board? A good place to start is to increase the financial literacy of the current board. Now, I don’t mean the board needs to start taking accountancy exams and become financial experts, but there are lots of excellent training sessions run throughout the year run by professional organisations: and most of these training sessions are free.

I would encourage all board members to learn more about finance matters generally. Not only will it increase the financial expertise of the board, but it will also ensure that board members are more able (and confident) to understand, scrutinise and question the charity financials, which makes for better governance and better decision making.

How to find an expert

If you want someone who is professionally qualified on your board, there are a number of options. You can ask your contacts and see if they know anyone. Professional accountancy bodies such as ICAS will have web pages dedicated for their members to find volunteering opportunities with charities, and it may be worthwhile contacting these organisations to get your job advert posted. And don’t forget your own accountants or independent examiners. They will be able to provide advice on charity matters, and they will also be able to use their networks to recommend someone outside your usual channels.

David Shadwell joins us as Accounts and Business Support Partner

David Shadwell, an experienced financial services sector and SME business adviser, has been appointed as Partner within Chiene + Tait’s (C+T) Accounts and Business Support team. A University of Edinburgh graduate, he returns to the UK after a nine year spell in New Zealand.

David initially trained and qualified with a Big 4 firm in the Isle of Man, where he spent 14 years working in senior accountancy roles.  In 2011 he relocated to Wellington, New Zealand to take on a Partner role within a Big 4 firm. He joins C+T from Findex, one of Australasia’s largest advisory firms, where he served as Managing Partner.

David will be based at C+T’s Edinburgh office where he will work alongside Partner Jeremy Chittleburgh, the firm’s Head of Accounts and Business Support team.

Commenting on his appointment, David said: “I’m delighted to be back in Edinburgh and joining the impressive team at Chiene + Tait after nine fantastic years abroad. I look forward to working closely with my new colleagues, building on my experience and helping further develop the firm’s business.”

Jeremy Chittleburgh Senior Partner and the firm’s Head of C+T Accounts and Business Support team said: “We warmly welcome David, who brings a high level of international experience to the firm, particularly within the financial services and SME sectors. Despite the challenges of operating in the current pandemic, our team continues to grow and support our clients through this unprecedented time.”

Making Tax Digital ‘digital links’ requirement delayed

In response to the COVID-19 crisis, HMRC has confirmed that any businesses undertaking Making Tax Digital (MTD) for VAT now have an extension to 1 April 2021 (previous deadline 1 April or 1 October 2020) to meet the ‘digital links’ requirement related to their recordkeeping systems.

To be MTD for VAT compliant, the digital links requirement will see businesses move their system to ‘functional compatible software’. For clarity, a digital link is when the VAT data required for MTD is transferred between two digital places such as software or computer devices, for example when a business digitally transfers VAT data to their accountant in order for exemptions to be calculated. It also occurs when a business retains transactions with a spreadsheet and uses a formula to calculate a total. However, HMRC does have two strict rules on what defines a digital link for HMRC, that is:

  1. Data is transferred electronically between software programmes, products or applications – linked cells in a spreadsheet or a formula.
  2. The transfer is automated – it doesn’t need manual intervention such as copying data by hand, but a click of a button is considered a digital process.

HMRC also accepts less obvious digital links including:

  • Emailing a spreadsheet so it can be imported into software.
  • Using a memory stick or pen drive.
  • Import and export including downloading and uploading of files.
  • API transfer.

If you have a query about Making Tax Digital, contact our team today at MTD@chiene.co.uk.

Leap year – an opportunity to jump ahead on life admin

In this blog, Keith Brown in our Accounts and Business Support Team advises what you should do with the extra leap day this year and get ahead of life admin.

Leap years are special. As a day that only happens once every 4 years, 29 February always feels like bonus time; all the more so as it’s a Saturday this year.

So what to do with all this spare time?

Allow me to make some suggestions. After 31 March, 31 December is the most popular year end for companies. If this is the case for you, why not pull together your accounting records and send them in? This will mean you get plenty of time to plan for any tax which is due before you need to pay it, at the end of September.

Alternatively, if you don’t have a December year end, you could take this opportunity to review your processes and business. Our Accounts and Business Support Team utilise various projection and forecasting software packages, as well as having experience of different automating software to make it easier for you to record expenses on the go. So why not drop us an email or give us a call and see if there’s a way we could make life easier for you?

From a personal perspective, it’s not to late to get some tax planning done before the tax year ends on 5 April. Budget day is approaching and with rumours of changes to certain tax reliefs. This may be your last chance to take advantage of some of these, so scheduling a meeting with someone from our Personal Tax Team will be beneficial.

Life is getting busier for all of us, so it seems to me that an ideal way to use this additional bonus time would be to get things in motion to try to counter any last-minute stresses. From a business perspective, Chiene + Tait is ideally placed to help.

Charity SORP Changes

The SORP making body has recently confirmed, in its Invitation to Comment on Draft Update Bulletin 2 issued in February 2018, that it will not be issuing an updated SORP, and instead the December 2017 amendments to FRS 102 will be brought into charity accounting by issuing a second Update Bulletin.

The Charity SORP Changes can be viewed here.

The Trustees’ Report: tips and key points when drafting, part one

In my experience of producing or auditing annual accounts for charities, it is not unusual for the trustees’ report or directors’ report to be left to the end of the process.

Often the mere mention of the report as an outstanding item can elicit a sigh and a level of enthusiasm usually deployed during dental visits or preparation of a personal tax return.

Ironically, this part of the annual reporting process should be the fun bit – the figures should, in theory, appeal more to accountants like myself. If a Hollywood star advertised charity accounts like hair shampoo, they would start off with explaining the wonderful things the product was meant to do and how it changed their life, and only for completeness at the end go into the science bit of the figures.

So, for those who find drafting the trustees’ report rather a painful process, here are some general pointers which may be of assistance:

Start working on it early

There is no need to wait until the dust has settled on the financials. While these are important, they are a nuts-and-bolts representation of the charity’s activities and achievements during the year; the substance of what the organisation is all about and how it has performed should, in most cases, be clear at any time of the year. This has the added benefit of goals, activities, and outcomes being fresh in the mind – it is generally easier to write about things soon after they have happened, especially if you have something positive to report!

Delegate specific areas of the report

Delegation is a key skill of effective management, so think about who else on the board or senior management team can help with different elements of the report, depending on their particular focus. This can also promote ownership of what is, after all, the report of the trustees plural. This delegation is something that many charities, in particular larger and more complex ones, frequently do, though it remains important for one person to review the overall report and ensure messages are consistent and that it hangs together.

Look at how other charities draft their trustees’ reports

While copying what others do word for word is not advisable, the voluntary sector has a much better record of working collaboratively with third parties than the commercial sector. Using examples of good practice from different areas can also be applied to drafting the trustees’ report – and don’t just look at direct peers. Consider both larger and smaller charities, as well as those working in completely different areas of charitable endeavour – there are some great and innovative ways of conveying information in narrative reports out there.

Not seeing the wood for the trees

A trap that some organisations can easily fall into and one that usually springs up in the activities and achievements part of the report. Problems can occur when trying to include too much detail. A long list of items in the style of a ‘what I did on my holiday’ exercise might fulfil a does-what-it-says-on-the-tin approach, but can detract from an understanding of the overall objectives of an organisation. It is important to stand back a little and think of reporting in a top-down approach: start with general objectives and then link each specific achievement and activity back to how they helped you work towards your strategy. Detailed examples can be a good way of highlighting the day-to-day actions of your strategy, but an overabundance can muddy the waters and risks reader fatigue: this is, after all, the ‘fun’ part of financial reporting.

If you have a query about your Trustees’ Report, please contact Euan at euan.morrison@chiene.co.uk or call 0131 558 5800.

Some more specific guidance on Trustees’ Reports is at:

For more hints and tips, read part two of this blog.

7 Tips on Writing a Business Plan with Impact

In my capacity as a Business Support Manager at Chiene + Tait LLP, we regularly review business plans from clients in order that they can leverage bank loans or independent funding. Over the years, there are a couple of key things that I’ve learnt that can help a business plan stand out against its competitors.

The first thing is to ensure that you use a simple layout, are consistent with your font and don’t forget to spell and grammar check your document before you give it to anyone. Also, make sure you get at least two people to review it and check for any omissions or errors.

 

1.    Don’t forget to start with an executive summary

If all else fails this is the section that the readers (and there may be more than one) will review and provide an overall picture of your business. It’s important to get this bit right – start with a brief, concise explanation of the business idea and cover why your business is unique. Also give a brief synopsis of your financial information to let the reader understand your current position.

 

2.    Then it’s time to produce a company overview

This is the bit that goes into the detail about your business – its history, why you started it, what it does, who it helps, how, what you have achieved to date and the milestones you’ve achieved.  If necessary, include details of your barriers to entry such as regulations etc. This section will give the reader all the information they need to know about your business in order to help them understand what you are trying to achieve.

 

3.    Include an industry analysis

Now it’s time to highlight where your business is placed within its industry. What do you do differently from your competitors and why you are currently in your choice of market? Are there opportunities for growth? From where? Why? What are your challenges? Consider the impact of seasonality. This section will give the reader confidence that you truly understand your sector and what the future potentially holds for your industry.  It may be useful to include your marketing plans here, and how you plan to implement these.

 

4.    Provide a customer analysis

In order to make a business successful, you need to know your audience. Who will be buying your product? What are the demographics of your audience? Why they will buy your product? What is your unique selling point (USP) to the audience? Consider the concentration of your customers. Having an understanding of your customer shows that you fully appreciate where your future growth will come from.

 

5.    Your management plan is next up

Before a funder will invest in your business, they will need to know that you have the staff capacity to deliver. This is where a management plan is essential. This section outlines who your team members are, what they do, details of their qualifications and experience, and any mentor/board assistance you have in place. Including a management plan helps a funder to see how you aim to deliver your vision with the help of your team, along with good governance and a team of advisers. On the flipside, you should also acknowledge any gaps you have, for example problems with staffing or lack of management advice.
6.    Financial plan

Any funder, whether they are a bank, investor or other business will want to know about your finances. It’s best practice to provide information on what income you are looking for and where this will be spent so that the funder knows what their money is going towards. Equally, you need to show what you plan to spend the funds on and provide expenditure highlights on significant items.

 

7.    Remember this is your opportunity to shine!

No one knows your business better than you. Talk about it (but use simple language and avoid jargon!) and convey your passion for what you do but don’t try and write war and peace! The document should be succinct, and convey the key points. Try to use graphics such as images, tables and charts where appropriate to illustrate your text and make it easier to read.  Perhaps include suggested logos or sample menus for example.  If applicable, a SWOT (strengths, weaknesses, opportunities and threats) analysis might illustrate your thoughts better than pages of text.

 

Overall, be realistic about your business and know the details inside out so you can backup any questions an investor has.

 

If you have any further questions, I’ve recorded a webinar that talks through these points in more detail. You can find it online here and please don’t hesitate to get in touch if you would like any further help!

 

Julia Reid

C+T Business Support Department