John Selwood’s Q&As
Questions at the Autumn Roadshow related to the new UK GAAP and other challenges faced by auditors.Q: My charity audit client has had a messy split from its finance director. Details of the severance package are confidential, as set out in a compromise agreement. The CEO says that the financial statements cannot contain any disclosures of the termination package. Although the new Charities SORP (FRS 102) requires extensive disclosures, these cannot be made without breaching the terms of the compromise agreement. As auditor, I feel uneasy about this. What do I do?
A: Under existing UK GAAP for charities, some disclosures relating to this severance package will be required. When applying new UK GAAP for charities (for periods commencing on or after 1 January 2015) it is likely that more extensive disclosures will need to be included in the comparatives.
In respect of redundancy or termination payments, SORP (FRS 102) requires the following disclosures:
- the total amount for the reporting period;
- the nature of the payment;
- its accounting policy; and
- the extent of funding at the reporting date...
This is an extract from an article in the November 2014 edition of Audit & Beyond, the magazine of the Audit and Assurance Faculty.
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