The trustees, who are also directors of the charity for the purposes of the Companies Act 2006, present their report and the audited financial statements of the charity for the year ended 31st March 2019.
The financial statements have been prepared in accordance with the accounting policies set out in note 1 to the financial statements and comply with the Charity's governing document, the Companies Act 2006 and “Accounting and Reporting by Charities: Statement of Recommended Practice applicable to charities preparing their accounts in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102)” (as amended for accounting periods commencing from 1 January 2016) .
The Memorandum and Articles of Association established the aims and objectives of the Society to “fulfil the precepts of Catholic Social Teaching within the area of the Roman Catholic Diocese of Shrewsbury, particularly, but not exclusively, by providing services and facilities directed to children and families who are in need”. The Trustees, under the Diocesan Bishop’s direction, continue to work to promote the precepts of Catholic Social Teaching and any lawful charitable purposes, including education and relief of poverty and suffering, promoted or supported by the Church in the Diocese and beyond.
The majority of objectives were transferred to CARITAS Diocese of Shrewsbury from December 2016.
The key objective that remains is in respect of the Post Adoption Services (via Nugent Care) and fostering support for those tracing their personal histories. A secondary objective is the support of CARITAS Diocese of Shrewsbury, by the provision of expertise and knowledge through secondment.
All donations received continue to support the objectives of the Society.
Volunteers
As the Catholic Children’s Society has changed its primary objectives to a primarily administrative charity the use of volunteers directly in its activities has also been transferred to CARITAS Diocese of Shrewsbury.
Charitable activities
With the objectives and activities of the Society being significantly reduced to that of an administrative charity, the performance has been in line with expectations and has fulfilled all of its obligations.
Financial position
In common with other charities, the Society continues to face challenges in securing income to support its work.
The charity, as already stated, has transferred most of its activities to CARITAS Diocese of Shrewsbury save for those around adoption and support for those who wish to trace their histories.
As such a significant element of income arises from secondment for those employees who cannot be effectively transferred within the transfer deed without creating significant financial risk to the Society.
This financial risk arises from the defined benefits pension scheme and its current deficit of £461,000 (2018 - £428,000) as noted within these financial statements. To mitigate this position the charity has entered into a long-term plan to reduce this shortfall in a managed and structured methodology to protect its financial viability and its core remaining objectives. As a consequence, the result of this deficit has placed the Society’s reserves into a negative position.
In terms of expenditure, £149,935 (2018 - £146,988) has been spent on charitable activities with most of this cost being on staff delivering the services of the Society.
The Trustees note that a deficit has been recorded for the year after adjustments for the defined benefit pension scheme of some £58,935 (2018- £70,162 surplus).
Turning to the Balance Sheet, the Trustees note that the Society retains positive net current assets of £35,198 whilst the net assets are in deficit of £98,360. The charity has made clear the reasons around the deficit, and has structured the recovery to protect its solvency. The Trustees have received assurances from the Diocese of Shrewsbury that interim support will be available until the future plans are in place.
Reserves policy
At 31 March 2019 the Society had a total of £98,360 in deficit (2018 - £39,426 in deficit), being restricted and unrestricted funds. The restricted funds total some £6,677 in deficit (2018 - £6,677 in deficit). Further details are set out in Note 17 to the accounts.
With the impact of the pension deficit and the limited objectives of the Society the primary reserve policy is to generate sufficient reserves to meet the obligations of the repayment arrangement. We can confirm that this has been achieved for this financial period.
Risk Assessment and Risk Management
The Trustees have in place a risk management process to assess risks to which the Charity i s exposed, in particular those relating to the operational areas, finances and investment assets. This involves assessing the likelihood and potential impact of occurrence and identifying means of mitigation. The Society has a rigorous safeguarding policy and activities are monitored for compliance.
Plans for future periods
The Society remains committed to the continued success of all of its objectives and responsibilities.
A key foundation stone to support the Society is to mitigate as much of the administrative cost to ensure the cost is reflective of its remaining objectives around adoption, by supporting CARITAS Diocese of Shrewsbury with its core objectives and improving its revenue streams.
Governing document
The Catholic Children's Society is a registered charity , number 509793 . It was established as a company limited by guarantee on 16 November 1978 and the governing documents are its memorandum and articles of association, as amended by special resolutions dated 13 December 1989, 21 September 1999 and 29 November 2001 . On incorporation the Society became the successor organisation to The Shrewsbury Catholic Protection and Rescue Society, which was dissolved shortly after.
The Society operates within the area of the Diocese of Shrewsbury, which has 93 parishes (along with 28 other churches and chapels) and 106 Catholic Schools in Cheshire, Shropshire and parts of Derbyshire, Merseyside and Greater Manchester.
The Board of Trustees confirm that they have complied with the duty in the Charities Act 2011 section 17 to have due regard to public benefit guidance published by the Charity Commission in determining the activities undertaken by the Charity.
The Trustees, who are also the directors for the purpose of company law, and who served during the year and up to the date of signature of the financial statements were:
The affairs of the Charity are governed by the Trustees under the chairmanship of the Bishop. All Trustees are appointed and removed by the Bishop who is empowered to do so by the Trust Deed. The Board consists of two clergy and four lay members. The clergy Trustees are appointed for their expertise in parochial, spiritual and pastoral matters. The lay Trustees are selected for their skills and experience in business, management and property. Further lay trustees would be chosen to match any perceived skill requirement. New Trustees are provided with the terms of reference and a pack of information relating to the constitution, governance and operation of the Trust. In order to ensure that the Trustees have the necessary up to date knowledge to govern the Charity, the Chair of Trustees has instigated a programme of trustee training, delivered by suitably qualified and experienced Individuals. The Board has established various sub-committees to advise it on aspects of the Trust's activities. The Bishop has also established certain commissions and councils to provide advice in other areas.
None of the Trustees has any beneficial interest in the company. All of the Trustees are members of the company and guarantee to contribute an amount not exceeding £5 in the event of a winding up.
Connected Charities
The Roman Catholic Diocese of Shrewsbury is a separately registered charitable trust, Registration No 234025, and the Society operates from Diocesan property, rent free.
CARITAS Diocese of Shrewsbury is a separately registered charitable trust, Registration No 1169317, and the Society provides through secondment and at cost non-transferrable staff.
The Trustees, who are also the directors of The Catholic Children's Society (Shrewsbury Diocese) Inc. for the purpose of company law, are responsible for preparing the Trustees' Report and the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).
Company Law requires the Trustees to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Charity and of the incoming resources and application of resources, including the income and expenditure, of the charitable company for that year.
In preparing these financial statements, the Trustees are required to:
- select suitable accounting policies and then apply them consistently;
- observe the methods and principles in the Charities SORP;
- make judgements and estimates that are reasonable and prudent;
- state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and
- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Charity will continue in operation.
The Trustees are responsible for keeping adequate accounting records that disclose with reasonable accuracy at any time the financial position of the Charity and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Charity and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
In accordance with the company's articles, a resolution proposing that Lewis Evans Partnership LLP be reappointed as auditor of the company will be put at a General Meeting.
The trustees' r eport was approved by the Board of Trustees.
Opinion
We have audited the financial statements of The Catholic Children's Society (Shrewsbury Diocese) Inc. (the ‘Charity’) for the year ended 31 March 2019 which comprise the statement of financial activities, the balance sheet and the notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion, the financial statements:
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the Charity in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
the trustees' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or
the Trustees have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the Charity’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.
Other information
The Trustees are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
In our opinion, based on the work undertaken in the course of our audit:
the information given in the trustees' Report, which includes the d irectors’ r eport prepared for the purposes of company law, for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the d irectors’ r eport included within the trustees' r eport has been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Charity and its environment obtained in the course of the audit, we have not identified material misstatements in the d irectors’ r eport included within the trustees' r eport.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
we have not received all the information and explanations we require for our audit; or
the Trustees were not entitled to prepare the financial statements in accordance with the small companies regime and take advantage of the small companies’ exemptions in preparing the trustees' r eport and from the requirement to prepare a s trategic r eport.
As explained more fully in the s tatement of trustees' r esponsibilities, the Trustees, who are also the directors of the Charity for the purpose of company law, are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Trustees determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Trustees are responsible for assessing the Charity’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Trustees either intend to liquidate the charitable company or to cease operations, or have no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: http://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Use of our report
This report is made solely to the charitable company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the charitable company's members those matters we are required to state to them in an auditors' report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the charitable company and the charitable company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Net interest cost
The statement of financial activities includes all gains and losses recognised in the year.
From 9 December 2016, the family support work of Catholic Children's Society was moved to Caritas. The only ongoing charitable activities are the adoption support works.
The Catholic Children's Society (Shrewsbury Diocese) Inc. is a private charitable company limited by guarantee incorporated in England and Wales. The registered office is St Josephs Presbytery, Wheatland Lane, Wallasey, CH44 7ED, England.
The financial statements have been prepared in accordance with the Charity's governing document, the Companies Act 2006 and “Accounting and Reporting by Charities: Statement of Recommended Practice applicable to charities preparing their accounts in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102)” (as amended for accounting periods commencing from 1 January 2016). The Charity is a Public Benefit Entity as defined by FRS 102.
The Charity has taken advantage of the provisions in the SORP for charities applying FRS 102 Update Bulletin 1 not to prepare a Statement of Cash Flows.
The financial statements are prepared in sterling , which is the functional currency of the Charity. Monetary a mounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention, modified to include certain financial instruments at fair value. The principal accounting policies adopted are set out below.
The Trustees have considered the future trading of the Charity. The Charity is dependent upon the continued support of the Diocese of Shrewsbury in order that it can meet its liabilities as they fall due. The Trustees expect the Diocese to continue to support the Charity for the foreseeable future. Taking this support into account, a t the time of approving the financial statements, the Trustees have a reasonable expectation that the Charity has adequate resources to continue in operational existence for the foreseeable future. Thus the Trustees continue to adopt the going concern basis of accounting in preparing the financial statements.
Restricted funds are subject to specific conditions by donors as to how they may be used. The purposes and uses of the restricted funds are set out in the notes to the financial statements.
Turnover is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided in the normal course of business, net of discounts, VAT and other sales related taxes.
Liabilities are recognised as expenditure as soon as there is a legal or constructive obligation committing the charity to that expenditure, it is probable that a transfer of economic benefits will be required in settlement and the amount of the obligation can be measured reliably. Expenditure is accounted for on an accruals basis and has been classified under headings that aggregate all cost related to the category. Where costs cannot be directly attributed to particular headings they have been allocated to activities on a basis consistent with the use of resources.
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in net income/(expenditure) for the year.
At each reporting end date, the Charity reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any ) .
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually, and whenever there is an indication that the asset may be impaired.
Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
The Charity has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the Charity's balance sheet when the Charity becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Basic financial liabilities, including creditors and bank loans are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future p aymen ts discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of operations from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Financial liabilities are derecognised when the Charity’s contractual obligations expire or are discharged or cancelled.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the Charity is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
The charity operates a pension scheme providing benefits based on final pensionable pay. The assets of the scheme are held separately from those of the company, being with the Merseyside Pension Fund. This scheme has now been closed to new employees.
The cost of providing benefits under defined benefit plans is determined separately for each plan using the projected unit credit method, and is based on actuarial advice.
The change in the net defined benefit liability arising from employee service during the year is recognised as an employee cost. The cost of plan introductions, benefit changes, settlements and curtailments are recognised as incurred.
The net interest element is determined by multiplying the net defined benefit liability by the discount rate, taking into account any changes in the net defined benefit liability during the period as a result of contribution and benefit payments. The net interest is recognised in income/(expenditure) for the year .
Remeasurement changes comprise actuarial gains and losses, the effect of the asset ceiling and the return on the net defined benefit liability excluding amounts included in net interest. These are recognised immediately in other recognised gains and losses in the period in which they occur and are not reclassified to income/(expenditure) in subsequent periods.
The net defined benefit pension asset or liability in the balance sheet comprises the total for each plan of the present value of the defined benefit obligation (using a discount rate based on high quality corporate bonds), less the fair value of plan assets out of which the obligations are to be settled directly. Fair value is based on market price information, and in the case of quoted securities is the published bid price. The value of a net pension benefit asset is limited to the amount that may be recovered either through reduced contributions or agreed refunds from the scheme.
In the application of the Charity’s accounting policies, the Trustees are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Grant income
The Trustees of Caritas Diocese of Shrewsbury, a related charity, awarded a grant of £30,000 (2018: £Nil) to the charity to help meet costs and objectives.
Amounts received for staff under secondment
Project activities
Motor and travel
Welfare activity
Property assets transferred to school usage
Motor and travel
Consultancy fees
Sundries
All support and governance costs have been allocated to charitable activities. The majority of the staff costs of the charity are funded by Caritas Diocese of Shrewsbury for staff seconded to the related charity.
The average monthly number of employees during the year was:
Net interest cost
Due to a relocation to Wheatland Lane, Seacombe, the property assets at St Paul's House are no longer in use by the charity and are now solely used by St Paul's primary school. These assets have therefore been treated as fully disposed of in these financial statements.
The remaining property improvements are in respect of St Aidan's Centre, Wythnshawe, which remains in use for charitable purposes.
The assumed life expectations on retirement at age 65 are:
Amounts taken to other comprehensive income:
The amounts included in the balance sheet arising from the Charity's obligations in respect of defined benefit plans are as follows:
Movements in the present value of defined benefit obligations:
The defined benefit obligations arise from plans which are wholly or partly funded.
Movements in the fair value of plan assets:
The fair value of plan assets at the reporting period end was as follows:
Funds received relating to adoption and family support services offered to schools in a specific area are treated as restricted.
Adoption
Historically, the Society has provided this service to families living within the Diocesan boundary. Files for families and children accessing this service must be kept for one hundred years. The Society has not employed an adoption worker for a number of years and has used Nugent Liverpool to carry out post adoption work for those seeking information and reunion with their birth families.
Unrestricted
Restricted
Unrestricted
Restricted
The remuneration of key management personnel is as follows.
During the year the Charity entered into the following transactions with related parties:
Staff secondment and associated costs were recharged in the period to Caritas Diocese of Shrewsbury, a related charity, and are disclosed as charitable income. Caritas has made direct salary and associated payments in respect of the seconded staff.
The property improvements at St Aidan's Centre are used for charitable purposes by Caritas with no rental being charged.
At the end of the year, amounts of £5,960 (2018: £24,585) were owed to Caritas and are included within Other creditors.
The Charity is under the control of the Trustees. Under certain circumstances the Bishop of Shrewsbury, as permanent Chair of the Charity, has a casting vote under the Articles of Association.