Guide to completing the year end Branch return
2016
Contents:Page:
Guidance for Treasurers
1)Introduction2
2)When do I need to submit my annual return?2
3)Which form do I need to fill in?2
4)Who checks my annual return before submission?3
5)General principles4
6)Completing the Receipts and Payments Form8
7)Completing the Branch Accounts Form14
8)RBL Branch authority to disclose information Form30
9)Branch Treasurer Checklist32
Guidance for Auditors and Independent Examiners
10)The Royal British Legion – audit requirements and criteria33
11)Terms of Reference for Audit or Independent Examination35
12)Independent examination – Planning Checklist40
13)Independent examination – Documentation Checklist41
14) Independent examination – Work Programme42
1.Introduction
This guide is designed to help Branches complete their annual return.
The Royal British Legion has a legal obligation to produce annual, audited accounts which include the results, assets and liabilities of all Branches, Counties, trusts and companies within The Royal British Legion Group. Branches play an important role in ensuring the accounts are accurate and complete and that the Legion’s auditors have all the information they need to complete their audit.
The form your branch needs to complete will depend on the value of its assets, the level of income & expenditure for the year and whether or not the Branch has a property. The relevant criteria are set out in Section 4 below.
Please take the time to read this Guide so that you are clear on the information we need from your Branch. Should you have any queries, please contact the branch accounting team at to speak to the Branch & Trust Accountant telephone0203 057 7039.
2.When do I need to submit my annual return?
Your return mustbe submitted by 30 September 2016at the latest. This is the date stipulated in the Royal Charter. The Membership Council will be informed of non-returns and action will be taken against those Branches which fail to submit annual returns for two consecutive financial years.
If you are unable to complete your branch return or believe you may struggle to meet the 30 September deadline you must notify your Membership Support Officer as soon as possible.
The Legion’s Annual Accounts can only be completed once we receive your return. Once the form has been signed by the Branch Committee and the Auditor/Independent Examiner, it should be immediately submitted to your County or District Secretary; you do not need to wait for the Branch Annual General Meeting to approve the return.
To reduce cost, Branch Treasurers should submit the original form to their Membership Support Officer, along with copies of the bank statement/s required and disclosure form. Membership Support Officers will then forward the documents to Head Office. The Branch Treasurer should make a copy of the annual return and file it, together with the original bank statements. The auditor or Independent Examiner will keep a copy of the return for their records.
3.Which form do I need to fill in?
As in prior years, your Branch will need to fill in either a Branch Accounts Form (BA) or Receipts and Payments Form (R&P).The table below sets out both the reporting requirements (i.e. which form you need to use) and the audit requirements (whether your Branch requires an audit or independent examination).
For Branches completing the Receipts and Paymentsform, please refer to sections 6 & 7 of this guidance document
For Branches completing the Branch Accounts form, please refer to section sections 6 & 8 of this guidance document
Copies of both forms are available in an Excel spreadsheet format from your local County/District Membership Support Officer or from the Finance Department atHead Office –
4.Who checks my annual return before submission?
Your annual return will require either an audit or an independent examination by an Independent Examiner, according to the criteria set out in Section 34 above. However, you can still have an independent examination if the ‘branch’ property is held under corporate trusteeship.
The vast majority of branches do NOT require a professional audit – it is a cost that most branches do not have to bear.
We continue to promote the services of those trained on the Legion Independent Examiners’Course to carry out Independent Examinations. Your Membership Support Officer will have contact details of Independent Examiners in your area. Using Legiontrained Independent Examiners (IE) saves the Legion both time and money. Our own studies have shown Legion trained independent examiners to be a more reliable and effective way of reviewing branch annual returns.
If you are using a firm of accountants, you must be clear whether you are asking them to carry out an ‘audit’ or an ‘Independent Examination’. You should clearly specifythis in the letter of engagement. For larger, more complex Branches – where a full audit is required – the Auditor must issue an ‘Audit Report’ confirming that a full audit was conducted and also complete the ‘Report of the Independent Examiner’. Smaller Branches using an accountant to carry out an Independent Examination should ask them to complete the ‘Report of the Independent Examiner’ included within this Guide. If you are unsure whether or not you should be employing the services of an auditor please contact your Membership Support Officer.
The Independent Examiner/Auditor will be required to tick the box on the first page of the report, confirming that he/she checked all bank account reconciliations performed by the Branch Treasurer with the bank statements. He/she should sign the return and print their name, address and contact telephone number.
5.General Principles
The general principles set out below are applicable to both theBranch Accounts and Receipts and Payments Forms.
5.1.Branch Certificate and procedure for submission
Please ensure that the Branch Certificate on Page 1 is completed and signed by the Branch Officers. This certificate confirms that the Branch Committee is aware that the Branch returns are their responsibility and that the return is accurate and complete.
It is the responsibility of the Branch Officersto arrange for the accounts to be examined in accordance with the Terms of Reference issued by the Board of Trustees.
The procedure for preparing and submitting the Branch Return is as follows:
- Branch officers sign the Branch Certificate first to confirm that the accounts prepared under their stewardship are correctly prepared and include all funds held by the Branch
- The Branch Certificate is then signed by the Independent Examiner (or if subject to audit, the Auditor issues their audit report) to confirm their independent opinion on the accounts
- The accounts are then submitted to the Membership Support Officerby 30 September, prior to AGM adoption
- After the accounts have been adopted at the Branch AGM the Branch Secretary will confirm this by signing the front sheet of the Branch copy of the return and adding the AGM date
If the branch has used LOMAS to generate their Branch Return the above procedure is still relevant. LOMAS is a way of creating the Branch Return electronically but it does not detract from the examination and submission process outlined above.
5.2.Bank statements
Branches are required to submit a copy of the bank statement for each bank account held by the branch which shows the balance on the account at 30 June 2016. You do not need to photocopy all bank statements for the period since the last return.
You should also complete an ‘Authority to Disclose’ form for each bank account held by the Branch. This is a requirement of the Legion’s auditors (see page 24).
5.3.Charity Commission Accounting Requirements
As a registered charity regulated by the Charity Commission, the Legion is required to comply with Charities Act 2011 and the Charities (Accounts and Reports) Regulations 2008. These regulations stipulate, among other things, that:
- Charities must analyse their income, expenditure, assets and liabilities between restricted and unrestricted funds.
Restricted funds are those where the donor has specified how the funds must be used by the Branch. Unrestricted funds are those raised to support all or any of the Legion’s charitable activities. Any restricted funds should be separately listed on pages 6 and 7 of the Branch Accounts with an explanation of the restriction in place over their use. These pages can also be used to record funds which are not restricted in nature but are being recorded separately by the Branch for other reasons.
- Charities must analyse their expenditure between:
- expenditure in support of the Legion’s charitable activities
- expenditure on fundraising and publicity
- expenditure on administration
Treasurers must consider the purpose of the expenditure rather than the nature of it when deciding where to include it on the form.
For example, the printing of a brochure for a fundraising event is a fundraising cost, while the printing of letterheads for the office should be included in administration. Both are printing costs but appear under different headings on the form.
We also need Branches to provide the following information about their branch, where applicable (please use the continuation sheet in the annual return)
- Operating leases (e.g. leases for photocopiers, premises etc):List each lease, its annual cost and expiry date
- ‘Related Party’transactions:List any payments in the year (other than reimbursement of expenses) to Branch Officers, or parties connected to Branch Officers (such as family). For example, if a Branch Officer’s son provided decorating services to the Branch, please list the person’s name, relationship to the Branch and amount paid
- Significant transactions after 30 June 2015:Any unusual or large transactions occurring between 30 June2015and the date your accounts are signed should be listed on the Continuation Sheet
- Significant gifts in kind: You should record any gifts of property or shares received by the Branch in the period 1 July2015to 30 June 2016. This is not intended to include donated raffle prizes or donations of goods for fundraising purposes (such as jumble)
- You must complete themembership statisticson page 2
5.4.Basis of preparation
The accounts are to be prepared on a Receipts and Payments basis – which means on the basis of income actually received and payments actually made during the period. Where a Branch is preparing Income and Expenditure Accounts on an accruals basis to meet local requirements, they must adjust the balance sheet and receipts and payments to remove accruals and prepayments for the purpose of this return.
5.5.Honoraria
Under employment legislation, charities are not permitted to pay round sum allowances (‘honoraria’) to volunteers. Guidelines issued by the past National Chairman specifically prohibit payments to volunteers other than for actual expenses incurred. This includes Legion Independent Examiners, who may not charge a fee or receive an honorarium.
5.6.Payment of Grants
Grants to other ex-Service charities may only be made with the prior authorisation of the Operations Directorateat Head Office. Branches should contact the External Grants Officer in the Operation Directorate to obtain such authorisation.
5.7.Transactions between Branches and other parts of the Legion:
All transactions between the Branch and other parts of the Legion must be shown separately on the annual return. This includes transactions with other Branches, County, Care Homes, Break Centres, the National Memorial Arboretum (NMA) or thePoppy Appeal. The name of the party to which payments were made or from which any sums were receivedmust be specified in the report. This information is very important for the completion of the Legion’s Annual Accounts to ensure that income and expenditure is not double counted.
5.8.Sub-Branches:
If your Branch became a sub-Branch during the period 1 July2015to 30 June 2016:
- If you are still holding funds at 30 June 2016,you must complete an annual return, reporting all relevant income, expenditure and bank balances for the sub-Branch.
- If you have followed the procedure in the Management Handbook and transferred all bank balances and records to the parent Branch, you should either:
i)submit a final account showing receipts and payments up to the date of becoming a sub-Branch, and show the transfer of funds to the parent Branch or;
ii)make a statement to the effect that all transactions from 1 July 2015 have been recorded in the books of the parent Branch, stating the name of the parent Branch.
No accounts will be required in the future; we only need the above information for the year in which the Branch becomes a sub-Branch.
5.9.Currency Denomination
If your accounts are not submitted in sterling, you should clearly state this on the form.
6.Completing theReceipts & Payments Form
Page 2 – Receipts and Payments Summary
Membership Statistics
You must provide these statistics to enable Membership to check theirMembership fee records and update their database. Please complete as follows:
A. Number of Members who pay by Direct Debit
B. Branch Subscription fee (the amount per member retained by the Branch, excluding the Membership fee)
C. Number of life members in the Branch (As awarded by the National Chairman)
D. Number of cash payers who pay the current Membership fee agreed atAnnual Conference in cash to the Branch
E. Number of members excused from payment of Membership fees (other than life members) in accordance with GR45/46
F. Number of youth members
G. Total number of all Branch members (A+C+D+E+F)
1. Bank and Cash Balances
Cash in Hand: All cash physically held by the Branch (at the dates shown), such as petty cash and any cash yet to be banked.
Accounts Held: List details (bank/institution name, sort code, account number) for all bank accounts held by the Branch, including Welfare Accounts and the Branch Funds Initiative (BFI) where applicable, showing clearly opening balances at the beginning of the current financial period (1 July 2015) and closing balances at the period end (30 June 2016). Each closing balance should be evidenced by a copy of a bank statement.
2. Total Cash Held
This is the total of cash held by the Branch, including cash in hand, in Branch bank accounts and in the BFI.
3. Total Increase/(decrease) in cash
This is the difference between Total Cash at the beginning and end of the period. An increase in cash should be a positive figure and a decrease in cash a negative figure.
4. Other Assets
List the value of all other assets held by the Branch, including the value of the Branch Standard and stock items. The value of amounts held in Trust funds will be completed by Head Office. This is because these assets will be included in the Legion’s accounts at their 30 June 2016 value.
5. Subscriptions Collected
Gross Subscriptions Collected: This should be the total of all receipts from subscriptions including the DD payers’ branch subscriptions received from Head Office
Membership Fees paid out: This records the payments made to Head Office.
6.Poppy Appeal Events
This should record income and expenditure related to fundraising events run in the name of the Poppy Appeal. Money collected as part of the main Poppy Appeal should be banked directly into the Head Office bank account and should not be recorded here (unless banked in the Branch bank account in error).
a)Poppy Appeal Events Receipts – Enter money collected for the Poppy Appeal through Branch events, which has been banked directly into the Branch bank account, including cash collections
b)Poppy Appeal Expenses - Enter expenses incurred running the PA event and the payment of the ‘profit’ made on the event to the Poppy Appeal.
- Fundraising Events
a)Fundraising Receipts – Enter the total receipts from general Branch fundraising events
b)Fundraising Expenses– Enter the total expenses incurred in respect of general Branch fundraising events.
- Monetary Gifts and Donations/ Legacies Received
Enter the total monetary gifts and donations received in the year where not already included above, including donations, refunds, unidentified income etc.
Under Charity accounting regulations, the Legion must show separately in its accounts the amount raised from legacies. Please include any legacies received into Branch bank accounts at 9b. This figure should exclude legacies held in trust at Head Office.
Any legacy received at the branch should be disclosed to Head Office.
- Interest Received/Paid
Enter the total interest received from funds held in bank and building society accounts, Branch Funds Initiative (BFI), deposit accountsand any other deposits. If interest was paid during the year, please enter the relevant amount in the Payments column.
Income from Investments
Enter the total income received from investments held locally. This includes the interest on National Savings Certificates and Bonds, Treasury Stock, COIF investment units, dividends etc. This does not include investments held in the Branch Funds Initiative (BFI) orin trust funds at Head Office.