Question 1: Preparation of receipts and payments (CC16) accounts
Question 1: Preparation of receipts and payments (CC16) accounts
You work as a trainee accountant in an accountancy practice which specialises in accounting for charities. One of their clients is a local golf club: The IBT Netball Club, which is registered with the Charities Commission for England and Wales (CCEW). You have been instructed by your manager to prepare, using the Charity Commissions template: CC16a, the receipts and payments account, for the year ending 31st December 2023 and a statement of assets and liabilities as at 31st December 2023.
The netball club has various membership levels. All membership fees are paid for the 12 months from 1st January to 31st December. Membership fees are payable on the 1st of each month; however, a small number of members pay in advance. Any member who joins part way through the year is charged a pro rata fee. No membership fees are owing at the year end.
In addition to members subscriptions, the club also benefits from other sources of funds: donations, fund raising events, competitions, and income from the coffee lounge.
As a result of a very generous benefactor, twenty years ago the netball club was gifted the land which has located on it two netball courts, a club house (which houses two changing rooms and a coffee lounge) and a small car park for 30 cars. At the reporting date, the current market value of these assets is 850,000 for the land and 175,000 for the club house.
Alongside one of the netball courts are two team shelters which were bought, at a cost of 8,500, two years ago and are expected to last a total of ten years before they will need replacing.
A few years ago, 25,000 in cash was donated by a long-standing member upon their death. The express terms of the gift were that the funds were only to be used for the provision of new uniforms and equipment.
The netball club has been awarded two grants during the year.
A grant was received in June 2023 for repairs to the car park and netball courts from the local council sports fund. Any overspend should be met from the clubs own funds.
In August 2023 a second grant was awarded from England Netball to cover the costs of sending coaches and umpires to the local schools to deliver training sessions over the first two school terms September 2023 to April 2024 consisting of a total of 400 hours. As of December 2023, the club had delivered 264 hours in total. For any hours not delivered by the end of April 2024 an amount pro-rata must be repaid to England Netball.
In March 2023 the netball club held a fund-raising event to raise funds to send two of its junior members, with a parent, to the England Roses U16 training camp, which was held at the end of July 2023. The funds raised would be used to cover their travel, all other costs would be met by England Netball. Any surplus would be made available for future club expenses.
The netball club employs two full-time members of staff:
a steward who manages the coffee lounge providing hot and cold drinks and snacks (for example: sandwiches and slices of cake, etc)
a handyman for the upkeep of the club house and courts.
One part-time staff is employed for house-keeping activities.
The coffee lounge, within the club house, sells snacks and drinks on match days to spectators and family members of the players and officials. The lounge area also doubles as a meeting place for activities such as tactic planning, trustee meetings, members parties and similar.
Minimal stock of drinks and snacks are held by the club, the year-end balance has been counted as 215.
You have been provided with the opening Statement of Assets and Liabilities as at 31st December 2022.
Non-Monetary Assets Land (gifted fair value) 780,000 Club house (gifted fair value) 168,000 Team shelters 8,500 Gift aid receivable from HMRC 625 Monetary assets Bank account balance (see below for breakdown) 25,310 Liabilities Suppliers 225 Members subscriptions received in advance 260 Utility accruals 380 Wages and associated taxes 442 The Netball club does not maintain separate bank accounts for each of their funds. The information given below provides a breakdown of the opening funds, as at 31st December 2022.
Monetary assets Unrestricted fund 5,446 Designated fund Nil Restricted fund death estate gift 19,864 You have also been provided with the following further relevant information as at 31st December 2023.
Gift aid receivable from the HMRC 820 Members subscriptions paid in advance for January 2024 285 Amounts owing to suppliers 280 Utility bills outstanding 415 Wages, PAYE, NI etc outstanding 465 On the attached spreadsheet you have been provided with twelve monthly cash book summaries for the netball club and are required to produce the year-end financial report.
Required:
You should prepare the following statements:
Statement of receipts and payments for the year ending 31st December 2023
Statement of assets and liabilities as at 31st December 2023
using the CCEW CC16a template provided.
Provide appropriate workings and notes to accompany the financial statements.
(75 marks)
For the following transactions, you should prepare a written explanation to inform the Board of Trustees:
how entries have been made to the Receipts and Payments accounts in part a) above, and
how these transactions would be reported if the charity were required to use the SORP accruals-based reporting.
The membership fees paid in advance for January 2024 and any adjustment to the amount disclosed in the receipts and payments account.
The value disclosed on the Statement of Assets and Liabilities for the team court-side shelters.
The grant received from England Netball in August 2023, the expenditure that was allocated against it and the balance on the fund at 31st December 2023.
Include transactions dealing with accruals, depreciation of assets (asset purchase in the year) the donation of a heritage asset and a grant received with performance conditions.
(25 marks)
Word limit: 500 words
(Total: 100 marks)
Question 2: Charitable issues
A few issues have arisen from a recent board of trustees meeting, and you have been asked to prepare a briefing note on each.
Issues identified
Currently the Annual Report and the Receipts and Payments Accounts are completed by the treasurer of the netball club. However, due to the expected level of revenue for the upcoming year, the trustees have asked for advice on changing its status from a members club to a Charitable Incorporated Organisation (CIO).
Several of the trustees have hinted that they are considering standing down over the next few years.
One of the members of the club has requested a copy of the latest minutes of the Board of trustees meeting. However, there are currently three differing copies on file.
a handwritten version in a notebook which has the date of the meeting and the names of the trustees attending together with a written account of what the meeting concerned
a pdf copy held on the computer which has some different information to the handwritten version, however it has been signed by the chair
a word version of the minutes without any signature, date or attendees
the club secretary is unsure which copy if the correct version of the minutes.
Interest has been expressed to start two new netball teams: an all-male and mixed team within the next few years. However, funds will need to be raised to build two further changing rooms.
Required:
The briefing note should include, for each of the issues identified above:
A clear statement of the issue faced by the charity in the case scenario.
(20 marks)
A critical discussion of why this issue is of significance for the charity drawing on relevant sources; Charity Commission (CCEW) guidance publications, Charity Acts 2011 & 2022, Charities SORP FRS 102(2019) and technical literature
(60 marks)
Relevant and informed recommendations to resolve the issue
(20 marks)
Word limit: 1,500 words
Question 1, part b)
(alternatively, you can provide comments within the spreadsheet tab)
The membership fees paid in advance for January 2024 and any adjustment to the amount disclosed in the receipts and payments account
The value disclosed on the Statement of Assets and Liabilities for the team court-side shelters.
The grant received from England Netball in August 2023, the expenditure that was allocated against it and the balance on the fund at 31st December 2023.
Question 2
Briefing note issue 1
Issue
Provide a brief overview of the issue facing the charity
Discussion
Provide an informed, unbiased discussion, back up with relevant sources, of the possible implications of the issue
Recommendations
Based on the discussion above, provide your recommendation for the solution
References
Briefing note issue 2
Issue
Provide a brief overview of the issue facing the charity
Discussion
Provide an informed, unbiased discussion, back up with relevant sources, of the possible implications of the issue
Recommendations
Based on the discussion above, provide your recommendation for the solution
References
Briefing note issue 3
Issue
Provide a brief overview of the issue facing the charity
Discussion
Provide an informed, unbiased discussion, back up with relevant sources, of the possible implications of the issue
Recommendations
Based on the discussion above, provide your recommendation for the solution
References
Briefing note issue 4
Issue
Provide a brief overview of the issue facing the charity
Discussion
Provide an informed, unbiased discussion, back up with relevant sources, of the possible implications of the issue
Recommendations
Based on the discussion above, provide your recommendation for the solution
References
