Annual Accounts – Audit or Review

We are getting a few people asking if a parish needs an audit or review for the annual accounts to 30 June 2014.  As posted in June, the Audit Policy of the Church has not changed from last year and I have attached the current policy to this post.

If the parish has total operating revenue of LESS than $125,000 for the 12 months ending 30 June 2014 then the Church does not require the parish to have an audit or review but you could have decide to have one, if you choose to have one.

If the parish has total revenue of the parish is between $125,001 and $2,500,000 then you need to have a review as set out in the Audit Policy.

If the parish has total revenue greater than $2,500,000 then you need to have an audit.

Audit Policy Final 15 May 2013

6 thoughts on “Annual Accounts – Audit or Review

  1. Hi. Should the board/parish revise the trust deeds if they opt not to be audited ? My suggestion is to update the Trust Deeds if they (parish/board) adopt the current legislation not to get the financial statement audited. Most of the Trust Deeds I seen stated that the financial statements required to be audited by Chartered Accountants. Else they will be a conflict between the current legislation and the Trust Deeds. Cheers

    Jeremy

    1. I agree that it is timely for those with Trust Deeds to look at a possible change. If the Trust Deed does only provide for an audit then this could create an inflexible arrangement into the future when the law may not require and audit or review but the Trust Deed does.

      However, changes to Trust Deeds must be looked at on an individual by individual case basis. In the case of a Church based Trust Deed, Conference may need to authorise the change, the change may also need to be registered with Charities Services and the registrar of registered Charitable Trusts.

    2. If the Trust Deed has an express clause that provides for an audit, then you need to comply with this provision until such time as the Trust Deed is changed. i am assuming that the Trust is NOT a Model Deed Trust as it has different requirements. Any changes to a Trust Deed within the Methodist Church needs to be approved by the general Secretary prior to the amendment. This is to ensure that the wording is correct and complies with the Law.

  2. Parishes and Synods are unincorporated entities and are not Trusts as you and I know them. They are bound by the Law Book of the Methodist Church and subject to its provisions.

    However, I agree that trustees or most trusts formed within the Church should look at their constitutions and see if its still appropriate for them to have some form of independent assurance engagement. There is no one answer and depends on a number of variables. Most church trusts will have provisions that they must also abide by Church Law and any change to the Trust Deed may need to be approved by Conference so its important to check what the Trust Deed says. It is also important to read on the process that must be used to make the change to the Trust Deed.

    If there is a conflict between a trust deed and the secular law, then the law will have precedence over what the trust deed provides.

  3. Is insurance proceeds and interest on insurance proceeds in CB&L regarded as “operating revenue”?

    What do I need to do to find an auditor?

    This whole process is a bit of a mystery to me and I badly need some assistance.

    Many thanks.

    1. Sorry about the late reply but here goes:

      From an accounting perspective, proceeds from insurance claims and interest on CB&L deposits are revenue and reported in the year earned or received.

      It is very difficult to find a person to undertake a formal assurance engagement (audit or review) now days, almost impossible. Looking into the future it will become more difficult as if you do require an audit or review you will need to engage a qualified person (an accountant with skills and experience in auditing). This will become a legal requirement. As you know, the Board of Administration use PKF Goldsmith Fox to undertake its audit and review work and the cost ranges from $1,050 to $1,500 plus GST.

      You are not alone about completing annual accounts. I have seen the trend that the Board is being asked to undertake more of the annual accounts and these requests come at a time when it is very busy for us. I have asked a small number of accounting firms for the cost of undertaking, what is known as a “compilation report” which is, in essence getting your Xero accounts into a format required and ready for audit. Once again this will come at a cost, which is unknown at this stage.

      I am in the process of starting work on having a series of workshops on transforming a profit and loss account and balance sheet from Xero into the new Tier 3 financial statements. This will be a ½ day workshop for people. I am targeting February and March of next year.

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