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June 2006 Finance Update

Welcome to our second newsletter of this financial year. This update summarises progress on some of the key matters have been, and are being, considered over the next few months.

This is part of our programme to keep you up-to-date with General Assembly’s financial performance and other matters for which the Resource Sub-committee is responsible. We invite you to view the monthly update from Assembly Office’s Finance Team that also includes information about finance matters.

John Trainor and Ian Watson
Co-Conveners Resource Sub-committee

2006/07 General Assembly budget

A preliminary General Assembly budget for the year starting 1 July 2006 has been prepared. We expect to consider this in detail at our meeting on 10 June. Following our discussions, the budget will be presented to Council of Assembly and then it will be communicated to the wider Church prior to the end of June.

Assembly Assessment for 2006/07

A component of setting the budget is determining the level of Assembly Assessment for the new financial year. Parishes are reminded of the importance of sending in their annual statistics forms, as assessment is based on the information provided.

Parishes will be advised of their assessment for 2006/07 toward the end of June.

Update on financial performance for 2005/06

For the first time in several years, the church is generating a surplus from operations. As reported in our December 2005 update, this is largely due to investment income being above budget. Overall, we remain on target to produce a year-end result where expenditure does not exceed income.

Underpayment of Assembly Assessment

However, the above-budget investment income is being off-set by the below-budget collection of Assembly Assessment. Unpaid assessments are now almost $250,000 higher than the same time last year.

This underpayment continues to be a cause for concern because of its impact on borrowings, and the difficulty underpayment poses for planning and managing cashflows. While we have sympathy for the financial constraints faced by parishes, it is untenable for parishes who pay their assessment on time and in full to continue subsidising those who are not. Parishes and presbyteries will shortly receive information asking that where possible, overdue assessments are paid before the end of the financial year ( 30 June 2006 ). Payment prior to that date will have a positive impact on the General Assembly’s financial position at year-end.

Cost-centre management

Prudent expense management is contributing to operating expenditure that is expected to be very close to budget by the end of the financial year.

Financial results for year ending 30 June 2006

The audit of financial results for the 2005/06 financial year is expected to be completed during August, and audited results will be issued to wider Church as early as possible following completion of the audit.

Charities Act

We continue to monitor the situation regarding the Charities Act, in conjunction with the Church Property Trustees.

The Charities Commission has delayed the start of the registration process, which was originally scheduled to start in July 2006 and extend until September 2007. The timing of the registration now awaits a Government decision.

In their recent newsletter, the Charities Commission has noted that they have already received applications for registration based on the draft forms. They have pointed out that there is absolutely no advantage in anticipating the process until the final forms have been agreed to, so at this stage it is the Sub-committee’s view that there is no need for parishes to commence registration.

We will keep parishes informed of requirements once we have an approved process and an agreed start date for registration.

Review of national services

As part of the review of national services undertaken as a result of Focus on the Future, work is continuing on reviewing and implementing changes to the services provided by the Finance team.

The 40 or so parishes who were utilising central payroll services provided by Finance have been sent information about this service being discontinued. The Finance team is working with parishes and providing advice to help with the transition to new arrangements.

The Church Property Trustees are continuing to investigate outsourcing administration of the Insurance Fund and Presbyterian Investment Fund, which are currently provided by the Finance team. More information will be available on this in due course.

Review of Assembly Assessment framework

We have invited comment from the wider Church on what the framework for calculating Assembly Assessment should look like going forward.

Feedback that we receive is expected to inform the development of the final proposal that will be put before General Assembly for consideration.

Much effort went into preparing and researching this paper, and we encourage feedback on the issues raised. Feedback is due by 15 June, so if you wish to make a contribution, please get your comments in before this date.