Should a charity prepay advertising expenditure if adverts not aired before year end?

Helen R

I am preparing accounts for my charity employer with a 31st March year end and need clarification on the treatment of advertising (for profile raising) billed in March with transmision potentially scheduled for April. The charity is not expecting to generate funds from the adverts and the costs are being funded by this years grant, so strictly speaking the matching concept would necessitate the expense being charged to this year rather than being prepaid. Doe anyone have any thoughts on this? Thanks

coojee

Helen R wrote: »

I am preparing accounts for my charity employer with a 31st March year end and need clarification on the treatment of advertising (for profile raising) billed in March with transmision potentially scheduled for April. The charity is not expecting to generate funds from the adverts and the costs are being funded by this years grant, so strictly speaking the matching concept would necessitate the expense being charged to this year rather than being prepaid. Doe anyone have any thoughts on this? Thanks

I'm assuming your charity is over the limit for preparing a receipts and payments account? If the expense is funded by a grant then I would think you've got to match the grant to the expenditure so you either c/f the expenditure and the grant to next year or you leave both in this year. Only guessing though.

reader

Helen R wrote: »

The charity is not expecting to generate funds from the adverts and the costs are being funded by this years grant, so strictly speaking the matching concept would necessitate the expense being charged to this year rather than being prepaid. Doe anyone have any thoughts on this? Thanks

Given that no actual transmission/advertising occured during 01/04/2010 - 31/03/2011 I would calculate and post the necessary prepayment.

I just think the accounts would look strange if there was an amount in advertising for the year to 31/03/2011 given no advertising/transmission actually occured during the year to 31/03/2011 (hence the need for the prepayment).

Helen R

Thanks for your reply. Yes our turnover is £500k+ We cant carry forward surplus on the type of restriced income paying for the advertising so I am thinking too that both income and expenses should be in this year. I will go and take a good look at the Charity SORP too. Many thanks.