Citizens Advice is funded by a grant-in-aid from BERR, a variety of project-based income, some trading activity and other income. The total income for the year was £45,683,000 (2007: £46,692,000) being a decrease of 2.2 per cent. This income is allocated across respective funds on the Statement of Financial Activities in accordance with the Statement of Recommended Practice (SORP) 2005.
The Statement of Financial Activities for the year ended 31 March 2007, show a deficit across all funds of £4,540,000 (2007: £3,815,000 surplus). The main reason for this was a timing difference on the receipt of the first quarter of Financial Inclusion Fund (FIF) money that was recorded in the previous financial year, generating a comparable surplus on the fund in 2006/07.
Looking at individual funds, there was a surplus on the BERR unrestricted fund of £447,000 (2007: £2,553,000 deficit). The surplus was due to a selection of vacant positions in the year which arose as a result the staff restructuring.
There was also a surplus on the Other Unrestricted fund before transfers of £395,000 (2007: £393,000). This resulted from bank interest, donations and a surplus generated
from the sale of training. The designated fund is used to meet the cost of funding the depreciation on our fixed assets.
The deficit of the BERR restricted fund of £5,903,000 (2007: £5,209,000 surplus). This resulted from a timing difference on the receipt of FIF money with the first quarter’s payment for the year just ended being accounted for in the previous year. In 2006/07, this resulted in us reporting an in-year surplus which is matched by an in-year deficit in 2007/08. There is no net difference taking the two years as a whole. The balance on restricted funds as at the 31 March 2008 was £126,000. The 2007/08 variance also impacts upon the movement of cash held on the balance sheet to £8,547,000 (2007: £15,285,000).
The Other Restricted fund incorporates all non-BERR restricted income and expenditure on a variety of projects. The surplus before transfers of £519,000 (2007: £538,000) arises from timing differences between the income and expenditure on projects. Project surpluses are expected to be utilised in full during the course of the project.
The Charity has invested its income to meet its charitable objectives in the following ways:
|2008 (£)||2008 (%)||2007 (£)||2007 (%)|
|Strengthening the bureaux network||11,390,000||22.7||14,657,000||34.2|
|Delivering IT Services||3,452,000||6.9||5,736,000||13.4|
|Bureaux and other grants||22,403,000||44.6||11,953,000||27.9|
|Developing our people||4,782,000||9.5||4,007,000||9.3|
|Making information available||2,873,000||5.7||1,887,000||4.4|
|Costs of generating funds||466,000||0.9||86,000||0.2|
On 27 March 2008, the Charity closed its defined benefit pension scheme to new entrants and future service accrual because the cost to the organisation of meeting future open ended commitments became untenable. A defined contribution scheme, which previously existed, is now available to all staff. A material deficit remains on the defined benefit pension scheme, full details of which can be found in note 22. Under FRS17, because the scheme is a multi-employer scheme, the assets and liabilities of the scheme cannot be separately identified and therefore, as in previous years, the pension scheme assets and liabilities cannot be shown on the balance sheet. Consideration was given as to whether it was appropriate to make a provision for the contributions towards the deficit under FRS12 but it was felt that the more specific standard, FRS17, took precedence, and this was consistent with previous years reporting.
There were also material uncertainties around placing a reliable estimate on any provision as the amount due will be liable to vary according to future actuarial valuations of the scheme. We recognise that this is a matter of judgement and note that our external auditors took a different view and hence have qualified their opinion on the basis of a disagreement with this accounting treatment. Trustees consider, that by including in Note 20 details of the contingent liability relating to the pension scheme the accounts accurately reflect the uncertain nature of the liabilities the charity has under the scheme and the contributions required to fund the deficit under arrangements agreed with the pension scheme trustees.
The following accounts are for Citizens Advice only. They do not include the financial results of the branches, all of which are separately constituted charitable organisations.
The reason for holding unrestricted reserves is to protect the charity from the impact of shortfalls in forecasted income, unforeseen expenditure or foreseen expenditure on one-off expenditure which the Charity would like to strategically commit to in the delivery of its charitable objectives.
While we aim to manage our BERR unrestricted reserves to meet the above, our maximum unrestricted BERR balance is equal to one month’s DTI grant in aid. The year end balance was £1,154,000 (2007: £707,000) being within this limit (see note 17 to the financial statements for further information). It is expected that this balance will be used to support any shortfall in funding over the next five years. In particular, we expect material one-off expenditure to renew the IT contract that underpins our IT systems as well as expenditure required in moving or refurbishing some offices within our property portfolio.
Other unrestricted reserves were £2,587,000 as at 31 March 08 (2007: £2,017,000), representing an increase of 28.3 per cent. At 31 March 2008, total reserves held were £7,170,000 (2007: £11,588,000). Restricted reserves, which showed a deficit of £3,275,000 at 31 March 08 (2007: £8,834,000 surplus), represent the balance of ongoing projects.
As required in its Memorandum paragraph 4(o), in furtherance of its objects, and no other purposes, the charitable company has the power to invest the monies of the charitable company not immediately required for its purposes in or upon such investments, securities or property as may be thought fit, subject nevertheless to such conditions and such consents as may, for the time being, be imposed or required by law.
All surplus funds are invested at the best interest rates attainable and interest rates are monitored regularly. Citizens Advice considers it to be prudent to hold all surplus funds in an interest bearing account so that there is no risk to the capital amount of funds. This is to protect the grant awarded to Citizens Advice for the purpose it was intended.
Joanne Hampton ACIS
30 July 2008
David Harker OBE
30 July 2008