Under the SORP, a transaction involving a trustee or other related party must always be regarded as material regardless of its size. The disclosures apply to trustees and de facto trustees.
There are a few exemptions from disclosure. These include donations from a trustee or related party provided there are no conditions attaching to the donation; any general voluntary services provided by a trustee; minor purchases from the charity on the same terms as those offered to the general public and payment or reimbursement of expenses where the trustee acts as agent for the charity. Expenses waived by a trustee do not require disclosure unless it is material in relation to the charity’s total expenditure.
Some specific disclosures required are as follows:
The disclosure for each remunerated trustee must include details of why the remuneration or benefits were paid. This is in addition to disclosing the legal authority, the individual trustee’s name, the amount of remuneration, benefits and pension contributions paid.
The disclosure includes the total amount of expenses paid to trustees for carrying out their duties and those paid directly to third parties. This disclosure must also include the total amount of expenses paid, the nature of those expenses and the number of trustees who were paid expenses or had expenses paid on their behalf.
Related party transactions
Related party transactions may be disclosed in total for similar transactions and type of related party, except where disclosure of an individual transaction or connected transactions is necessary for an understanding of the impact on the accounts or where is it required by law. A charity must be able to substantiate that a transaction with a related party was at market value if it is disclosed as such in the financial statements.
Staff costs and employee benefits
Along with the standard disclosure of staff costs, a charity must disclose details of any redundancy or termination payment. This includes the amount for the reporting period, the nature of the payment, the accounting policy for such payments and the extent of any funding at the balance sheet date.
Key management personnel
These are the senior management personnel to whom the day to day management of the charity is delegated and who report to the trustees. FRS102 uses the term to describe the trustees and senior management team.
The SORP requires disclosure of the total amount of employee benefits received by this group for their services. Employee benefits includes gross pay, benefits paid, employer pension contributions and employer national insurance contributions. The SORP suggests that for larger charities it may be useful to disclose for example, the chief executive’s or each team member’s employee benefits.