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Comments from ACCA
January 2004

The Association of Chartered Certified Accountants (ACCA) is pleased to have this opportunity to respond to the above consultation document. The document was considered by our Charities Panel and I am writing to give you their views.

Overall comments

The first two matters covered in the document are cases where more consistent definitions of different categories of inputs would make reporting by charities more comparable for users. We welcome CFDG's initiative in trying to achieve this and agree that comparability can be improved by the better disclosures suggested.

We would however make the following observations

• It is easy to overlook the greater comparability that the existing SORP has already given users
  
  
• Greater apparent comparability could be achieved, on behalf of users looking at a range of charities, by a detailed prescriptive approach - formats, more headings and so forth. This, however, would be to the detriment of a framework approach which recognises the wide ranging nature of charities and which allows individual charities to describe satisfactorily their activities to their own supporters (who may be less interested in comparisons between charities).

In terms of the valuation of volunteer time, we agree with the principle that all resources made available to a charity should be recognised in their financial statements. Donations of time are as much a resource received by a charity as cash donations. We do, however, have some doubts over the practicalities of the proposals and the degree to which useful, comparable information will result. We consider that would leave the SORP should be left as it stands at present as regards to the full recognition of such time, but would support the proposal in the document for disclosure in the trustees' report.

Fundraising costs

We agree that , in order to improve a common understanding of what are fundraising costs, first a common understanding of what is � fundraised income � must be developed. CFDG should go further than this , however, and exclude from this category of income , government grants and contracts which involve performance targets.

It will not always be feasible to analyse expenditure which raised funds in the current year from expenditure to develop future sources. Campaigns may straddle financial year ends. A charity may have some information from the donor to link income and costs in this way, and but this may not always be the case for a variety of reasons.

Paragraph 4.6 includes a recommendation that information about the level of future anticipated income should be given in the Trustees' Report. It is not clear exactly what sort of disclosure is envisaged here - a quantified forecast of income for the year ahead, or targeted trends, or general factors affecting income levels?

Management and administration costs

We generally support the proposals with the following exceptions:

• The proposal that the basis of allocations are agreed by trustees before the accounting period commences may be right in most cases. Some smaller charities, however, may have much more variable levels of activity and cost bases in any year , which could make a predetermined basis inappropriate.
  
  
• We do not find the title �Corporate governance' a significant improvement on �Management and administration'

Volunteer time

As noted in our general comments above, while supporting the principle, there are seem some doubts on the practical application. For these reasons we do not now support the recognition of volunteer time in the financial statements ( for now ?.) . We foresee , for example, that there may be difficulties in measuring the hours contributed on a consistent basis, especially hours donated for fundraising events and in branches. When it comes to valuing the hours the National Minimum Wage (NMW) would provide a comparable basis, however we are not clear why average earnings would be less relevant. The proposal to value using the NMW plus the actual value in the case of volunteers whose special skills or qualifications are required, may end up missing both comparability and accuracy and creates a problem of defining such exceptions .

We support the proposal for some disclosure in the Trustees Report for the reasons given in paragraph 4.24. Such a requirement might improve comparability allow some comparison and allow charities to gain more experience in the problems of collecting and valuing volunteer time. The disclosure might consist of the value of the volunteer time as proposed. As Though as a minimum , we suggest disclosure of the quantity of time, perhaps by way of the average number and full-time equivalents of trustees, employees and volunteers used in the charity's activities during the year.

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