1. Accounting policies (continued)
Programme related social investments
Programme related social investments are investments made in
order to directly further the charitable purposes of the Charity.
Any financial return obtained is not the primary reason for making
the investment. Programme related social investments are held
at cost adjusted for impairment losses. Impairments in the value
of programme related investments are charged to charitable
expenditure. Gains in the value of programme related investments
are credited to investment income.
Where the Charity has a significant interest in a programme
related investment, it will be treated as either a joint venture
or an associate, dependent on the level of control exerted by
the Charity. Joint ventures and associates are included at cost,
subsequently adjusted for the Charity's share in the associate's
net assets under the equity method in the consolidated financial
statements. The annual movement in the value of programme
related investments is shown as a separate category in the
investments note.
Cash at bank and in hand
Cash at bank and in hand includes cash in hand and deposits
held with UK banks. Macmillan also has cash balances that are
held by local fundraising committees. For those committees
which hold restricted cash balances and have an agreement in
place with Macmillan, the committees are responsible for how
these funds are spent.
Financial instruments
The Charity has applied the provisions of FRS 102, Section 11, 'Basic
Financial Instruments' and Section 12, 'Other Financial Instruments
Issues'. Financial assets and liabilities are recognised when the
Charity becomes a party to the contractual provisions of the
instrument. The Charity initially recognises a financial asset or a
financial liability at transaction price, for debtors and creditors this
is the settlement amount. Grant commitments over one year are
discounted to reflect present value.
Stock
Goods purchased for resale are valued at the lower of cost and
net realisable value.
Gifted investments awaiting sale
Gifted properties awaiting sale are valued at their fair value
which is their closing bid price on the current or previous
trading day.
Debtors and creditors
Trade debtors and other debtors are recognised at their
transaction price less any allowance for doubtful debts. Trade
creditors and other creditors are included at their nominal value
when there is a contractual obligation to settle.
Grant commitments
Grants to institutions and partner organisations are
generally made to organisations to meet employment and
development costs of Macmillan post holders and related
service developments, to assess and meet patient needs. This
covers costs associated with health, financial, information and
emotional and practical support developments, including
buildings. The full value of the charitable grant is recognised in
the year in which the commitment is made and shown as a long
or short-term creditor as appropriate. The discount applied to
grant commitments not yet paid falling due after more than one
year to adjust the valuation to its present value is the Bank of
England base rate as at the balance sheet date. Commitments
are recognised on the date the Charity formally notifies the
recipient of the award.
Macmillan grants are one-off grants to individuals which
are made to cover a wide range of practical needs and are
recognised in the year in which they are paid.
Releases of grant commitments
It may become necessary to withdraw and redeploy a grant
which has been approved in a prior year due to funding not
being fully utilised or no longer being required by the recipient.
Where redeployment occurs the intention of the original
grant is observed where possible. If it cannot be spent in the
current year, the funds are released to the original unrestricted
or restricted reserve. The release of grant commitments is
recognised as a deduction to grant expenditure in the current
year. Please see note 11 and note 21 for more information on
grant releases.
Contingent liabilities
Contingent liabilities are a possible obligation that arises from
past events where its existence will be confirmed only by
the occurrence of one or more uncertain future events not
wholly within the entity's control. Contingent liabilities are not
recognised in the financial statements, but are disclosed as a
narrative note.
Provisions
Provisions are recognised when the Charity has a present
legal or constructive obligation as a result of a past event, it is
probable that an outflow of resources will be required to settle
the obligation and the amount can be reliably estimated.
Leases
The Charity enters into operating leases as detailed in note 28.
Expenditure on operating leases is charged in the Statement of
Financial Activities as incurred. The Charity does not hold any
finance leases.
Fund accounting
Restricted, designated and general funds are separately
disclosed, as set out in note 26. The different funds held are
defined as follows:
Restricted funds These are subject to specific restrictions
imposed by the donor
or by the nature of the appeal.
Designated funds These are set aside at the discretion of the
trustees for specific purposes. They would
otherwise form part of the general funds
General funds These are available to spend at the
discretion of the trustees in furtherance of
the charitable objectives of the Charity.
Any transfers between funds and any allocations to and from
designated funds are approved by trustees.
Pensions
During the year the Charity operated a defined benefit pension
scheme for employees. The scheme closed to new members
on 30 April 2005, and to the accrual of future benefits, with no
further member contributions required, on 30 June 2010. The
scheme is accounted for in accordance with FRS 102.
Following the closure of the scheme during 2010, the resultant
scheme surplus is not recognised on the Charity's Balance
Sheet. Any future scheme deficit would be shown on the
Charity's Balance Sheet. The amounts charged in the Statement
of Financial Activities for defined contribution pension schemes
represent the contributions payable in the period.
The assets of the scheme are held separately from those of the
Charity in an independently administered fund. The Charity also
contributes to a separate stakeholder pension scheme provided
by Legal & General. Contributions to the Charity's stakeholder
pension scheme are charged to the Statement of Financial
Activities in the year in which they become payable.
Macmillan contributed to a further defined benefit pension
scheme, the National Health Service Pension Scheme which is
unfunded. It is not possible for Macmillan to identify its share
of the liabilities for the scheme and therefore contributions are
recognised in the Statement of Financial Activities in the year in
which they become payable.
99
Environmental, social
and governance review
Financial review
Strategic report
Overview
Financial statements
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