SORP Committee to consider expenses disclosure 1

Finance | Tania Mason | 16 Jun 2009

The Charities SORP Committee is to discuss the possibility of the next SORP recommending disclosure of charity chief executives' expenses, at its meeting today.

The idea was suggested by Paul Palmer, professor of voluntary sector management at Cass Business School and a former member of the SORP Committee, in a response to a blog on Charity Finance last week.

The blog by accountant and Charity Finance blogger John Tate, argued that a culture of openness within charities makes abuse of expenses claims much less likely.

Palmer agreed, and even intimated that such abuse may be more widespread than the sector wishes to admit. “I seem to recall that former conservative MP Conway story was supposed to be an exception rather than the norm for MPs,” he wrote.

He went on: “It may be time that in the same way that top salaries/trustee expenses are disclosed, so it is the time for the forthcoming SORP to request the same on expenses?”

New SORP expected next year

The SORP (Statement of Recommended Practice) is published by the Charity Commission in accordance with the Accounting Standards Board code of practice. It provides accounting recommendations and sets out the format and content of charity reports and accounts.

The current SORP was prepared by the Charities SORP Committee, a group of financial experts from the sector, in 2005 and its legal references were updated in July 2008. The Committee is now working on the next SORP which is expected to be published in 2010.

Palmer raised the issue of expenses disclosure with some of the current members of the SORP Committee last week and the Charity Commission, whose chief executive Andrew Hind chairs the Committee, confirmed that the prospect was expected to be discussed at its meeting today.

The current SORP does not recommend that charity executives’ expenses be disclosed.

It does recommend that trustees’ expenses should be disclosed in a note to the accounts on an aggregate basis, indicating the nature of the expenses (e.g. travel, subsistence, training etc.) and the number of trustees involved, but does not advise itemising expenses for each individual trustee. Charities can go beyond this level of disclosure if they wish, of course.

'Transparency vs red tape burden'

A Commission spokeswoman said: “Any possible changes to the SORP would be a matter for the SORP Committee, in which the Charity Commission plays an active part, to consider.

“In any future discussion of this issue, the need for transparency and the administrative burden on charities should be kept in an appropriate balance.”

The SORP Committee makes recommendations for the content of a SORP although the Commission can, in extreme cases, override the Committee’s views if a full explanation of why is provided and if the ASB agrees. The Commission has never exercised these override powers.

Directory: The Sorp Committee
Who's Who: Tania Mason

Place a comment

Gareth Morgan
Professor of Charity Studies
Sheffield Hallam University
19 Jun 2009

I think Paul raises a useful suggestion about the next SORP requiring more disclosure about expenses.

But it is worth bearing in mind that ALREADY the SORP requires expenses paid to trustees - they are the ones charged with governance.

If we are to have further disclosure of expenses, I am not sure that it would tell us much to show just the the expenses paid to chief execs or senior staff: I would prefer to know the total expenses paid to ALL mebers of staff. This could be an exta line in the staff costs note, where we already have to disclose staff numbers, total salaries, employer's NI and employer's pension contributions.

However, I would also be very interested to have disclosure of expenses paid to volunteers - which in some charities are shockingly low.

So I suggest a requirement to show expenses in three categories: (a) trustees (b) staff (c) volunteers. This would also solve the problem where sometimes one or two trustees are heavily involved as volunteers in the operational side of a charity and get what appear to be huge trustee expenses, but most of it is for their voluntary work on the charity's services.

BUT we must be wary of complicating the SORP for the sake of it.

In particular, a very clear definition of "expenses" is needed before it is any use - so for example, if a charity books and pays directly for a hotel room should this count as expenses for the person concerned, even though there is no claim and reimbursement. What about charities which provide company cars - do we include all the car costs or just the petrol expenses claimed? Without this being pinned down the figures will be as meaningless as in the first SORP when every charity had a different view of what was meant by fundraising costs.

Also, charities below the audit threshold should certainly be exempted from any additional requirements like this.

[Reply]

Comments

[Cancel] | Reply to:

Name *

Email *

Organisation

Job Title

Comments *

Verification *

* Please read our Community Standards

Close »

Community Standards

The civilsociety.co.uk community and comments board is intended as a platform for informed and civilised debate.

We hope to encourage a broad range of views, however, there are standards that we expect commentators to uphold. We reserve the right to delete or amend any comments that do not adhere to these standards.

We welcome:

Robust but respectful debate
Strongly held opinions
Intelligent relevant discussion
The sharing of relevant experiences
New participants

We will not publish:

Rude, threatening, offensive, obscene or abusive language, or links to such material
Links to commercial organisations or spam postings. The comments board is not an advertising platform
The posting of contact details for yourself or others
Comments intended for malicious purpose or mindless abuse
Comments purporting to be from another person or organisation under false pretences
Gratuitous criticism, commentary or self-promotion
Any material which breaches copyright or privacy laws, or could be considered libellous
The use of the comments board for the pursuit or extension of personal disputes

Be aware:

Views expressed on the comments board are left at users’ discretion and are in no way views held or supported by Civil Society Media
Comments left by others may not be accurate, do not rely on them as fact
You may be misunderstood - sarcasm and humour can easily be taken out of context, try to be clear

Please:

Enjoy the opportunity to express your opinion and respect the right of others to express theirs
Confine your remarks to issues rather than personalities

Together we can keep our community a polite, respectful and intelligent platform for discussion.