The end of the Financial Year is arriving very quickly and the four accountants in the Connexional Office will be entering their very busy season. We have about 35 sets of annual accounts to prepare and most of these need to be audited or reviewed by external auditors. The auditors are arriving in the middle of July and not leaving us until the end of August.
Although we will be more than happy to answer questions and provide help, our time will be limited and therefore we would ask for your patience when it comes to replying to e-mails and providing support calls.
There are four ways that this year’s annual accounts can be prepared by you:
- Do as you have done in previous years;
- Produce a Profit and Loss (also called a Statement of Financial Performance) and a Balance Sheet (also called a Statement of Financial Position) from Xero and then add a set of Notes to the Financial Statements using either Word or Excel.
- Produce a Profit and Loss (also called a Statement of Financial Performance), a Balance Sheet (also called a Statement of Financial Position) and a set of Notes to the Financial Statements using “Annual Accounts”. In Xero, you have to be an Advisor rather than a Standard user and you will also need an understanding of how this report pack works in Xero.
- Determine if you a Tier 3 or Tier 4 reporting entity under the new financial reporting system which will become mandatory from 1 April 2015 and start using that for the annual accounts to 30 June 2014. That way you will have a better idea on what to do next year when it becomes a mandatory requirement.
Not producing any annual accounts is not an option as it is a requirement of Conference that annual accounts are prepared and sent to the General Secretary. I would refer you to Section 10:1.3.1 to Section 10:1.3.4 of the Methodist Law Book.
Option 1 does not require an explanation from me as you can simply do what you did last year. If this is your first year using Xero and you want to use the Xero Profit and Loss and Balance Sheet as a basis for your annual accounts, then please do so. If you are unsure how these work, then firstly read the help files in Xero or give us a ring and we will walk you through it. Having said that, I need to warn you that from 1 April 2015 you will NOT be able to continue with what you have done in the past. For most of you, you will need to determine if you are a Tier 3 or 4 reporting entity (see below). Xero are working on report packs that will allow Xero users to produce Tier 3 and 4 annual accounts but this will not be ready until the end of this calendar year.
For Option 2, there are standard layouts for Profit and Loss and Balance Sheets in Xero that can be used directly or exported to Excel and then “tidied up” as you see necessary and then Notes to the Financial Statements produced and attached in either Word or Excel. If you do not know what the notes to accounts look like, then let me know and I will send you a set of what they look like and you can adapt them, otherwise, look at the guidance notes for Tier 3 and 4 standards.
For Option 3, you need to have a different level of access in Xero as this gives you access to an annual accounts report pack. However, this report pack will need to edited and saved. They are standard reports for trusts, companies, etc. and therefore do not fit into our needs (this will change next year!!!). You may decide it’s too much work, given the changes that will happen next year.
Option 4 is the best option moving forward as you are going to be required to follow these new accounting standards from 1 April 2015 anyway. I have attached the Tier 3 and 4 Standards and Guidance Notes for you as well as an Excel template for you to use.
As already stated, we understand Xero are working on producing the new tier structure templates so from the next financial year you should be able to produce the new tier reports directly from Xero.
Am I tier 3 or 4?
In general and without going into too much detail, if your operating payments are under $125,000 to 30 June 2014 then you are Tier 4. If your operating expenditure is between $125,001 and $2,000,000, then you are Tier 3. If you are under $125,000 you can use Tier 3 if you want.
Tier 3 PBE SFR-A (NFP) – The Actual Standard in PDF format
Tier 3 Explanatory Guide A5 – PBE SFR-A (NFP) – Guidance Notes for the Standard
Tier 3 Template for PBE SFR-A (NFP) – UNProtected XLS Version MASTER – Excel Spreadsheet
Tier 4 PBE SFR-C (NFP) – The Actual Standard in PDF format
Tier 4 Explanatory Guide A6 – PBE SFR-C (NFP) Final to Issue – The Guide in PDF format
Happy New Financial Year!!!!