With the Sorp consultation coming to an end, Andrew Hind discusses some of the challenges facing today's charity finance directors.
Within the first few days of this month, the consultation on the new Sorp will draw to a close.
It could be well after 2020 before the next fundamental rewrite of charity financial reporting requirements occurs, so we had better all do everything we can to ensure that Sorp 2014 is up to the job.
By which I mean, the new Sorp must create a framework which requires charities to report to external stakeholders clearly and honestly about how public money has been both raised and spent; the strength or otherwise of their balance sheet; and – crucially – what impact all this activity has had on delivering the organisation’s charitable objectives.
An accessible and informative trustees’ report and accounts can make a bigger contribution to bolstering public trust in the charity concerned than almost anything else.
You don’t need remarkable sector insight to see how vital that has become these days, when the press is awash with ‘charity-bashing’ stories ranging from the perennial CEO salaries shocker, to allegations of irresponsible lobbying, fraud and the financing of international terrorism.
Clearly, the role of the FD is absolutely central to ensuring first-class external reporting in any charity.
But vital though that part of the role undoubtedly is, I would argue that a finance leader’s internal responsibilities remain the most important part of the job.
A timely benchmarking study from PwC last month shone a revealing light on just what a cutting-edge contribution the modern finance leader can make to a world-class organisation.
In Unlocking Potential, the big-four audit firm said that its research data “confirm that the leading finance functions are different from the rest, and provide more valued insight to the business. They manage talent more effectively and have the right people in the right roles. They spend less time gathering data, and much more time understanding what it means. And their costs are much lower than the average.”
Finance as a creative force
The report notes that the finance department traditionally has served as a corporate support function, reacting to the organisation’s operational needs; but in the most impressively-led businesses finance “acts as the creative force behind insight and change”.
In a passage that will read as a distressingly familiar scenario to many charity FDs, PwC notes that most finance departments continue to get bogged down in routine tasks.
The study found that, on average, finance staff are spending nearly twice as much time gathering data as analysing it.
By 2030, the authors believe that top-tier companies will spend no time on data gathering, with technology delivering financial data to all stakeholders in real time.
So there is the challenge for charity FDs. As we think about making Sorp 2014 work effectively for our charities and their stakeholders, let us also commit to adopting the best-in-class approach outlined for the CFO in PwC’s study.
It says: “Today’s CFO must move beyond budgeting and control, to take responsibility for driving corporate performance and delivering strategic analysis to key stakeholders, both internal and external.”
That’s not a bad objective to insert into your appraisal for next year, is it?
