6. Charities VAT and Taxation
There is a lot of advice on tax guidance for charities on the HMRC website.
7. Useful to know Excel, Sage, Quick Books, MYOB, TAS, Sun Accounts (these are the ones most of the groups I have come across use)
8. Understanding of full cost recovery of costs and the difference between cost allocations and cost apportionment
Full cost recovery means recovering or funding the full costs of a project or service. In addition to the costs directly associated with the project, such as staff and equipment, projects will also draw on the rest of the organisation. For example, adequate finance, human resources, management, and IT systems, are also integral components of any project or service. The full cost of any project therefore includes an element of each type of overhead cost, which should be allocated on a comprehensive, robust, and defensible basis.
The allocation of overheads or cost allocation is to directly and specifically charge the overheads to the cost centre.
Two basic conditions exist before we can consider it as allocation:
· The cost centre must have caused the overhead to be incurred and
· The exact amount of overhead must be known
Hence briefly, allocation is more precise in that direct charging of specific overhead costs to cost centres or departments can be made with a degree of certainty. Effectively the overhead cost is a specific charge to the cost centre.
Apportionment of overheads occurs where the overheads cannot be specifically identifiable to the specific cost unit centre. Hence the need to find a suitable basis to charge the various cost unit with a fair share of the overheads.
Illustration:
Types of Overheads Basis of apportionment
Rent, rates, water and utilities By Area
Office salaries, canteen, supervision By Number of employees
Depreciation of fixed assets Cost/book value
Briefly, cost apportionment is ARBITRARY wherein the cost is spread to departments on what is hopefully a fair and reasonable basis e.g rent and rates on the basis of area occupied, supervision costs based on the number of employees in each department.
Edited at 21 Mar 2011 09:59 AM GMT
Edited at 21 Mar 2011 10:00 AM GMT
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