CITIZENS ADVICE has hit back after its auditor Baker Tilly resigned following disagreement over accounting for the charity’s pension deficit.
Finance director Alistair Gibbons said differences in interpretation between accounting standards FRS12 and FRS17 underpin the dispute, arguing even accountants cannot agree on the issue and it is unclear how the two interact.
The charity took advice from Baker Tilly, before consulting with legal experts and other independent accountancy professionals.
Following a qualification on last year’s accounts stemming from the pensions conundrum, Gibbons wrote an impassioned article for Civil Society.
In it, he said FRS17 was considered to take precedence over FRS12. Provision for the pension scheme’s full liabilities was therefore not made, and the charity decided to honour this decision despite the risk of an accounts qualification.
“We felt that closing the scheme put Citizens Advice in a stronger position, and not balance-sheet insolvent as the [FRS12] provision would have made us. We were also concerned that a weaker balance sheet would affect our credit rating and have an adverse impact on pension protection levy calculations,” Gibbons said.
Citizens Advice was tight-lipped on whether it will shake up its pensions accounting following Baker Tilly’s resignation, saying: “Not in light of Baker Tilly’s resignation but we will review the situation with our new auditors, whomever they may be, next year.”
In Gibbons’ article, he said the charity will review the accounting treatment of its pension liability this year and “reconsider the risk of adverse stakeholder perceptions arising, either for a qualified set of accounts or for a very large provision on the balance sheet”.
Citizens Advice said other large charities with a similar pension structure are grappling with the issue and insisted “it is a question of presentation” that does not impact upon the organisation’s solvency.
“We are absolutely committed to having unqualified accounts in future and fully expect Baker Tilly to sign off on this year’s accounts with no changes,” a spokesman concluded.
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