ARC minutes 2019-06-06

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ARC Minutes 6th June 2019

Housekeeping

Present

Jane Carlin (Chair), Marnie Woodward, Susan Williams, Verity Lucas (Kingston Smith). Staff: Lucy Crompton-Reid, Davina Johnson, Katie Crampton (minuting).

Apologies

Kate West

Declarations of interest

None.

Report from Kingston Smith

Action: Change Marnie to Martha in the Annual Report.

Vertity Lucas, our account manager at Kingston Smith, went over the draft report of our audit.

Section 1 highlights the risks Kingston Smith identified at the start of the process. As we have a small number of staff in the finance team Management Override can be a risk, but from the reviews and testing performed no issues were identified. Income Recognition is the risk that income won’t be recognised in the correct period, but from the testing performed by Kingston Smith there were no adjustments required.

Section 2 is a report of significant findings from the audit, of which there were none. The letter of recommendation from KS is therefore their standard letter with no amendments.

Section 3 covers points for the management letter, which everything highlighted by KS being considered a low risk. Point 1 is that throughout the accounts we recognise transactions in sterling rather than booking them in the source currency and recognising and exchange movement, but it is an immaterial amount and therefore a low risk. Point 2 is a gifts in kind adjustment of just under £3000, which has no effect on the surplus and had already been adjusted at the time of the meeting. Point 3 was the Natural History Museum’s pro bono venue hire for the 2018 AGM, which has now been adjusted for. Point 4 referred to the capitalisation of two laptops, each of which cost less than £500 (the capitalisation threshold). However, following a discussion in which DAJ explained that these were purchased together, which brought the total amount over the threshold - plus she wanted to include these on the Fixed Assets Register - VL agreed to remove this management point.

Section 4 includes general updates relevant to the charity sector. Of particular note is the recommendation to consider a PAYE health check at some point, as HMRC aim to carry out employer compliance reviews every five years and is increasingly issuing penalties for late filing and the submission of incorrect returns.

Appendix 1 details the gifts in kind adjustment of £2917. There are no other adjusting items to report.

Review of the draft Annual Report and Accounts

MW asked why International Working is a new budget line and LCR explained that we have separated this out from External Relations and Advocacy for greater accuracy and transparency about our expenditure as part of a global movement. MW highlighted some inconsistencies in the order of budget headings and suggested this could be corrected. It was agreed that the Programmes heading in the SoFA would be changed to Partnership Programmes.

There was a discussion about whether QRPedia is an asset and should have an investment value on the balance sheet. DAJ clarified that it is intellectual property which doesn’t generate any income for Wikimedia UK (and in fact is currently a cost in terms of developer time).

MW and JC questioned the rise in audit fees. DAJ explained that these were included as an estimate in the accounts. There was a discussion of when the fees are agreed and VL confirmed that this would be as part of the scoping letter, not (generally) at the time of appointment. We should expect a scoping letter in December for next year’s audit and JC/DAJ to negotiate fees then as necessary. Action: add an agenda item for the December ARC meeting to approve the audit quote for 2020.

Note 13: MW asked why this was blank and DAJ explained that we are still awaiting some related party transactions.

Note 17: MW noted that the numbers need looking at in relation to balance sheet as there are some very minor rounding errors. Action for DAJ to consider suggested changes.

Note 19: MW asked what this was telling us. VL said that it wasn’t a hugely helpful point in the current SORP, and that from 2020 it will not be included.

QFMR

DAJ reported that this year’s Q1 is typical in that it isn’t spectacular, with few variances. LCR talked to the variances as detailed in the Finance Commentary.

As part of the report on fundraising, LCR highlighted that there is a downward trend in direct debit donations and an upward trend in ad hoc donations, both of which are sector-wide trends in individual giving.

LCR confirmed that we acknowledge ad hoc donations according to a stewarding policy, unless we are not able to contact the individual themselves (which is the case of certain giving schemes).

LCR mentioned a recent partnership event with the commercial organisation adidas, and that we are expecting a charitable donation from the company.

There was a brief discussion about whether we accrue on a monthly or quarterly basis, or just on an annual basis when we close our accounts.

MW asked whether the IT and Telephony should be split. DAJ stated that she would rather keep them together for now but any significant variances - likely to be in IT rather than Telephony - would be reported to ARC as usual.

Cashflow

DAJ has produced a cash flow projection as requested. This illustrates 1) periods of the year when we are likely to be in breach of our policy in terms of bank balance, and 2) our dependence on the grant from the Wikimedia Foundation. It should be read in conjunction with MW’s paper on bank accounts (below).

Bank Accounts

Wikimedia UK currently banks with three institutions: Unity Bank, Coop Bank, and CAF Bank. The WMUK Financial Policy specifies a ceiling of £85,000 in any given institution, in line with the Financial Services Compensation Scheme, unless specifically authorised.

A main source of cash is the semi-annual Wikimedia Foundation grant to WMUK. When the grant arrives, the bank balances regularly breech the £85k notional limit, sometimes across all three banks. In addition, as all accounts are instant access (for cash flow purposes), they pay very low interest rates (nil to 0.15%). Longer fixed term placements of 6 months or a year, which offer higher interest rates, might tie up funds which are needed for operating purposes.

The committee discussed the possibility of setting up a fourth bank account or use of a short term money market fund, which could spread deposits to keep balances within the £85k ceiling, and possibly generate a bit more interest income for the Organisation.

The group concluded that any additional income was unlikely to compensate for the extra administration involved in managing a fourth alternative. The risk of loss was marginal, and DJ was asked to be alert to possible issues affecting the institutions holding WMUK funds.

It was agreed to recommend no change to the current banking arrangements at this time, but to alert the Board to the situation, and in line with Section (8m) of the WMUK Finance Policy, to ask the Board to authorise occasional holdings over the Government guarantee limit, where necessary.

Risk Register

LCR confirmed that she had reviewed the risk register prior to the meeting but that there were very few changes since March.

Risk 1 (loss of trustee expertise) has been downgraded slightly on the basis of the potential candidates standing at the next AGM.

LCR clarified that number 8 and 9 are different levels of risk because we have more control over WMUK’s public image than we do over Wikipedia’s.

There was a short discussion about the Brexit-related risks, but no changes to the overall ratings were proposed.

Action: JC asked if we could access the Foundation’s risk register online - LCR to check.

Action: JC and LCR to meet during August and review the risk register framework.

Technology and GDPR

DAJ shared a note on technology and GDPR, which included a number of completed actions and some that are in progress or still outstanding. Many of these concern CiviCRM and involve some combination of Veda (our CiviCRM consultants), Joe Brook and Tom Morton (our IT contractors).

LCR made it clear that the amount of work required to manage our IT in the past six months or so has been very significant. The overdue CiviCRM upgrade has led to a huge amount of work for DAJ and RM (Rich Matthews) due to some expected but some unforeseen repercussions, which are still being worked through. There has also been an increase in issues around QRpedia.

Action: QRPedia to be added to the risk register.

DAJ has included GDPR in the paper, as the implementation of GDPR is so closely connected to CiviCRM improvements, including the new GDPR module which will give all our contacts direct access to their own details on the system. This will allow them to manage their own preferences and contact permissions, and is now considered best practice.

JC asked what has prompted the wikimedia.org.uk rebuild, and LCR responded that it is long overdue as the website is now old and outdated. This will happen over several years, both in terms of the time that it will realistically take to plan and implement, but also for budgetary reasons.

Approval of previous minutes

Typos corrected by KC.

AOB

MW requested links to the bullet pointed list in Trustee Induction pack. KC to add.

There are currently four holders of company credit cards - the three members of SMT plus Josie as Chair. LCR proposed that Sara Thomas, our Programme Co-ordinator in Scotland, be issued with a credit card and shared a short written business case to support this. She ashed that Sara be given a credit card with a limit of £750 per month, with an increase to the overall spending limit rather than redistribution of the current card limits. ARC agreed both the card and the increase to our overall limit on credit cards.

To ask the auditors whether the unsigned accounts can legally go on Meta (if requested by the Foundation).

Date of next meeting

12th September 2019.