Charity Language Control

What do you call your bank account, amounts you’re owed, your computers, vehicles etc? Perhaps you would call them your organisation’s ‘resources’. More likely you would call them your assets – at least that’s what they have been called ever since people first started recording transactions in any organised way.

But Charities Services has been rejecting some Tier 4 reports that call assets’ assets’ and not ‘resources’, saying they are non-compliant with the new reporting rules.

When I protested I was told that, while they agree that using the ‘official’ category names are not mandatory, they considered them misleading as assets and liabilities in Tier 4 are not reported according to accrual principles and therefore they are not really assets or liabilities.

The External Reporting Board, which has developed the Tier 4 standard, seems to disagree.  In section A75 of the standard they explain what ‘resources’ are, and that they are ‘commonly referred to as assets’. Likewise for commitments, which is what Tier 4 groups are now required to call liabilities.

So I have requested that Charities Services seek guidance from the External Reporting Board before rejecting reports on such frivolous grounds. However, the External Reporting Board makes it clear in the explanatory notes to the standard that they relied heavily on Charities Services when developing it in the first place, so they are unlikely to take a stance that would put them at odds with their key resource.

Christchurch Community Accounting is trying to use language that is both understood by people and expresses the not-for-profit nature of the organisation. It is disappointing that this does not find approval with the body that regulates charities.

Perhaps some organisations want to take up a recommendation by my Charities Services correspondent: I was told that if I don’t like their rulings I can go to my MP…

Harald

 

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