ACCOUNTING & FINANCE WORK

Accounting & Finance Work In Charity Organization and Specifically In Richard House Children's Hospice

Chapter 1

Introduction

Purpose of the Study

The upheaval and changes to the post war consensus by the Conservative Government elected in 1979 has resulted in a dramatic shift in the delivery of personal social services; a transfer of services from being directly provided by the state to services provided by other agencies. The major “beneficiary” of these changes has been the charity sector. Registration of new charities in 1994 totalled 11,616 with the Charity Commission estimating that between 8,000 and 9,000 new charities will be registered every year for the next few years. The Charity Commission Register records charities only in England and Wales and only those organizations with an income over £1,000. In 1994 the total number of charities on the register was 178,609. The total number of voluntary bodies which are not registered charities has been estimated at over 400,000. While many of these organizations are small, due to the “political” issue of not registering certain voluntary bodies that are overt campaigners, some large organizations like Amnesty International and Greenpeace are not registered charities.

Problem Statement

Charity accounts which are based on the principle of fund accounting will be required for charities with an income greater than £100,000 and the new accounting regulations are based on the Statement of Recommended Practice (SORP) “Accounting by Charities”. This new SORP, replacing a previous SORP was introduced in 1995. The SORP controversially combines capital and revenue by supplanting the income and expenditure account with a “statement of financial activities” focusing on an analysis of all incoming resources and the application of resources. New powers granted to the Charity Commission enable them to appoint a receiver and manager to run a charity: a power that it used four times in 1994.

Background of the Problem

The charity sector grew in the 1980s, inevitably interest focused on how charities account for their funds and what controls over their activities exist. The monitoring body is the Charity Commission, established in 1853. Nominally independent of government as a branch of the High Court, the Commission for its vote and accountability to Parliament reports through the Department of National Heritage. Two major reports in 1987 focused on the effective regulation of charities and were critical of the extent of the monitoring activity undertaken by the Commission. A subsequent trebling in resources over five years, reorganization and a new Charities Act in 1992 followed. The Charity Commission in 1995 stated that it intends to monitor regularly those charities with an income over £10,000. This monitoring is through the receipt of an annual return plus accounts and reports. A computerized program has been developed which monitors the returns and ascertains any problems, while the Commission's number of employed qualified accountants has gone from none in 1987 to five at the beginning of 1995, with further appointments planned.

Chapter 2

Literature Review

There has been a dramatic increase in academic study of the charity sector with over one hundred academics at ...