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From: Tacts Accountant

To: [email protected]

Subject: Year End Account 31st March 2013

Date: 23 March 2014 22:54:55

 

 

 

Dear Trustees

 

Re: Enfield Island Village Trust (EIVT) account for the year ending 31st March 2013

 

As part of my duties as an independent examiner and to enable me to complete my task, I will need to point out the following issues in relation to the account for the year ending 31st March 2013 for which I will need a response before we give an opinion on the account:-

 

Opening balances and financial statement for the year ending 31st March 2012

 

I would like the trustees who signed the account for the year ending 31st March 2012 to clarify the following figures for which there is not enough details to follow up:-

 

•Income and Expenditure account surplus of £11,893

It is shown in note 6 of the account that this surplus of income is to be distributed to members. I would like to refer you to your Memorandum of Articles of Association with regards to treatment of surpluses. If a surplus is available for distribution to members then this is taxable. A charity will

normally carry forward this figure to continue supporting its charitable objects rather than distributing it to members.

 

•Statement of movements in reserve

In note 7 of the account you have shown a movement in reserves and I could not make sense of what you mean by ‘transfer to funds during the year’ of £92,556. This particular statement does not equate to your surplus of £11,893. Your surplus in your income and expenditure account does not equate to your balance sheet balances too. If you take the opening year reserve of £835,649 and add it to your surplus for the year £11,893 should give you your reserve carried forward of £847, 542, not £802,328 as stated in that account. Your carried forward reserve has gone down although you had a surplus in the account. How could it be?

 

•In that account you are still making reference to charity act 1993, when the 2011 act came into effect from 14th March 2012 which means that you have to refer to the Charities Act 2011 in documents, reports, accounts or statements produced on or after 14 March 2012.

 

•The account does not differentiate between your Restricted Fund and Unrestricted Fund which is a requirement for SORP (Statement of

Recommended Principles) accounting standards for charities. In that year you received a grant from Big Lottery which are normally restricted fund and should have been analysed into restricted funding and its related activity and purpose.

 

The above information is important to us because we need reliable opening balances to justify this year’s account for the year ending 31st March 2013.

 

Residents Debtors

There have been changes made to the reported resident’s balances as at 31 Mar 2012 after the accounts have been filed. The opening balance had been amended on several occasions, evidenced by the members statements sent by Amber and compared to their "debit and credit balances report". As a result the figures are unreliable and cannot be used for this year account. Vladimir has produced an up to date report and reconciled all the debtors and as a result he has discovered a discrepancy of around £12,077 which will be left in the account to be investigated further.

 

Community Centre Projects

•The Big Lottery grant of £7,650 was spent this year. I have requested a copy of this grant application, the grant offer letter & conditions you

received from Big Lottery and any monitoring return sent to Big Lottery for this grant. Please provide. Big Lottery Fund - Air conditioners and installation for a total invoice of £14,742 has been treated fully as repairs and maintenance by Amber. There were two payments of £7,371. The air conditioners have a Useful Economic Life therefore have to be treated as fixed assets and the installation (labour) part as an expense.

 

•The Community Capacity Building grant from London Borough of Enfield (LBE) of £6,780 has not been fully claimed for this year. From your record it appears that you have not claimed the quarter payment for Oct 2012 to Dec 2012, although there was expenditure for this project in that period which was mainly salary. To enable me to reconcile this fund I will need a copy of the quarterly monitoring report for this grant which was submitted to LBE.

 

•The Resident Priority Fund is paid on invoice and in arrears. I will need a copy of all the invoices sent to LBE for all the claim made for that year

which was £27,785.80. Who was responsible for raising the invoices? LBE normally send a Remittance whenever they make payment. Please

provide those.

 

•£3730.30 was received from DWP. I could not find any evidence from your record that this programme has started or whether it is a payment

received for a previous work. Please confirm. I will need a copy of the application made and any correspondence from the funder about the

grant offer letter and its conditions.

 

•£2,500 was received for the Money Management Programme. I will need to know who funded this programme. I will need a copy of the application made and any correspondence from the funder about the grant offer letter and its conditions.

 

Payroll and staff

•In cross-checking payroll we noticed that Martine was being paid as an employee and self-employed worker. I have seen a contract of her

employment but have not been provided with a contract for her selfemployment with EIVT. If you do not have a contract for her selfemployment

service with EIVT, please confirm that this was verbally agreed by the trustees and who authorised this self-employment contract. I will need to know if HMRC was consulted and that you have completed an ‘Employment Status Indicator’ (ESI) tools available on the HMRC website to clarify & justify the employment v self-employment test. I need to point out that if this is investigated by HMRC and if they are not satisfied with this practice then EIVT could be liable to cover penalties and tax owed on all payments made to Martine as a self-employed worker services provided to EIVT. I advise the trustees to complete the ESI tools and keep a copy of the result in EIVT file if you have not done so already.

 

•Salaries/wages expense account should be £18,995.but is showing a nil balance as per Amber's expenditure report. The double entry bookkeeping has not been kept properly.

 

•PAYE/NI – NI was underpaid in 2011/12 and there was interest to be paid. Total of 763.07 was paid on 25/01/13. RESOLVED. Late filing of P35 which was evidenced by a HMRC letter for £500 penalty for late filing of P35. Could not trace the £500 as paid but the P35 was filed although it was incorrect

 

•Income for Community Centre has been recorded as an EXPENSE by Amber and is included in the total of expenses! Why? Overall it is very difficult to follow information received from Amber as they have not provided reconciled accounting information. There is no evidence of a cashbook record for each bank account and bank reconciliations. Vladimir has put together the bookkeeping record and as he inherited unreliable opening balances, the account is still made up of figures which need further investigations.

 

 

Some Information requested has not been forthcoming and it took a long time before all bank statements reaches us. So far we have not received the requested information from the Community centre projects funding and all those are delaying us in finalising the account.

 

I will need a response as soon as possible no later than Thursday 27th March 2014 before I give my opinion on the independent examination of the account for the year ending 31st March 2013.

 

 

 

 

Regards

Sakeel Toraub, FCCA

TACTS LIMITED

Chartered Certified Accountants

Independents Examiners Enquiry to previous Trustees in office between 1st April 12 and 31st March 13