ME International ME International ME International


Reproduced below:

The content of a letter sent to the Charity Commission today regarding the latest accounts from AfME.  Both the letter, and the full report referred to in the letter, have been forwarded to the Countess of Mar.

These are my own opinions based on the information I had available to me at the time, and as such in no way question the overall opinion of the accounts.  Indeed, I would welcome further information and discussion from the Trustees on the issues raised.

Tim

From Tim Jackson - Chartered Accountant
t.jackson10@NTLWORLD.COM

Dear Sir

RE: Action for M.E. Charity Number 1036419

As an ME sufferer I am concerned by the current activities of the above Charity.  I am aware that you are in receipt of a document entitled The AfME Dossier 2004 from Jane Bryant, whose young child is a member of the Charity, and I would ask you to review my findings and submit them to your Regulation and Enablement Division in conjunction with the Dossier.
I have obtained the last set of accounts for the Charity and there are a number of issues that I would like to draw your attention to.  As I have only publicly available information to work with I realise that materiality of the issues may be a factor.  I attach a detailed report of my findings in order to support my conclusions.

I have noted, the following areas of potential non-compliance with legislation have.   Paragraph references refer to the Statement of Recommended Practice (SORP) unless otherwise stated:

·      Details of how the restricted funds have arisen, the restrictions imposed and the purpose of each fund is required (Para 49 (b)).  For example, the NLCB grant for `groups and volunteers' is specifically to pay for `the salary of a full time Volunteers organiser fees for freelance staff, producing information, training and travel and running costs' according to the NLCB website.  This type of information should be included in the accounts for all major restricted funds.

·      Consolidated accounts have not been produced because of an exemption in the Financial Reporting Standard for Smaller Entities (FRSSE).  Paragraph 300 of the SORP sets out details when consolidated accounts need not be prepared, and the only reason I can see for not producing consolidated accounts is on the basis of materiality of the Subsidiary to the Group (Para. 300(b)).  Where there is a conflict between the SORP and the FRSSE the SORP takes precedence.  Therefore, as I believe the subsidiary is material to the group, consolidated accounts should have been prepared.  Accounts Example A on the Charity Commission website supports this conclusion.

·      The Trustees' report is required to comment on the results of
both the Charity and its subsidiary (Para. 31 (d)).  The current statement is bland and does not refer to the subsidiary's results at all.

·      The results of the subsidiary should be shown separately on the Statement of Financial Activities (SOFA) for the Charity (Para. 109).  The income from the subsidiary is shown in note 11 only and does not appear separately on the SOFA.

·      Paragraph 315 of the SORP is required for all material subsidiaries whether consolidated accounts have been produced or not (Para. 111).  This requires disclosure of a summary of the trading results of the subsidiary, its assets, liabilities and funds.

·      The union of Action for M.E. and Westcare is described as a `merger' in the Trustees' Report. However, it does not meet the criteria for a merger set out in the FRSSE and should not be described as such.  It is not clear how this transaction has been accounted for in the accounts, except it has clearly not used merger accounting rules.  If payment was made for the assets transferred then it most likely to be an acquisition and should be disclosed as such, including calculation of Goodwill where applicable.  The other option would be to treat the transaction as a gift if no consideration was paid for the assets.

·      Since the `merger' with Westcare represents a distinct activity for the charity, i.e. the direct provision of services to the public, the results included in the accounts should be shown separately on both the SOFA and the income and expenditure account (or Profit and Loss account) (Paras. 67 and 337).

·      The pension contributions for all `higher paid staff' should be disclosed separately in the notes to the accounts (Paras. 173 and 174).  Since, in 2003, there is one employee who has income in excess of £50,000, the pension contributions for this employee should be disclosed.  These amounts are always considered to be material.

·      There is no statement regarding Related Party Transactions, i.e. those with the Trustees' and any entities over which they exert `significant influence'.  Whilst there may be none to disclose, it is prudent to state this in the account to confirm that the Trustees have at least considered the issue.

·      Details of the Trustees (who are also directors) shown in the Trustees' Report are not consistent with the details held by Companies House.  It appears Dr Derek Pheby has resigned since the year end which should be stated in the accounts.  Also the appointment of Mr Tom Gover on 24 July 2003 has not yet been notified to Companies House.  The appointments of the other Directors were not notified to Companies House within the 14 day period required either.

·      The allocation of expenses to restricted funds, in 2003, differs between page 12 and Note 11 (page 20).  This was not the case in 2002.  For Example, Page 12 shows expenditure on `Children Services' of £6,500, whilst on page 20 this expenditure has risen to £8,372, before any allocation of support costs.  As the restricted funds for `Children Services' is only £6,500 I would expect the remainder of the expenses to be borne out of unrestricted funds.  It appears that this excess has been transferred to another restricted fund.  Even if the expenditure meets the requirements of another fund, it is misleading to disclose the expenditure in this way.

·      According to the accounting policies note, the allocation of expenditure to restricted funds is based on `estimates' and `judgements'.  I would expect the majority of the `estimates' to be in relation to Salary expenses, where it is possible to record the time spent on each of the separate projects.  The same would apply to overheads (support costs) being allocated to restricted funds.  If this is the case then it should be stated in the accounts.

As mentioned above I am not in possession of all of the information I need to make definitive conclusions on the issues raised, but I would expect the Trustees to deal with my concerns in an appropriate manner.