Charity compliance update September 2017: Independent Examiner guidanceby
Jen Gerrard reports on the key changes to the Independent Examination guidelines and highlights the risk of getting caught out by the implementation timescales.
This month’s charity compliance update notes with interest the launch of the 2018 annual return consultation by the Charity Commission for England and Wales, following the 2017 annual return consultation. Read on for more information.
Independent Examiner guidance updated
On 4 September 2017 the Charity Commission for England and Wales published the findings from their Updating the framework for independent examination consultation, which closed on 30 September 2016.
Changes to the Independent examination of charity accounts: examiners (CC32) were originally intended to apply to accounting periods ending on or after 31 March 2017. However, for independent examiner’s reports signed by the examiner and dated on or after 1 December 2017 the new Directions and guidance must have been followed for the independent examination to have been done correctly.
The date from which the new Directions are mandatory is 1 December 2017. Examiners are encouraged to follow the new Directions and guidance straight away and not wait for the mandatory date of 1 December but the Commission will accept independent examiners’ reports based on the old Directions and guidance if these are signed on or before 30 November 2017.
From 1 December if an examiner has not followed the new Directions and guidance then they have not carried out their independent examination properly.
The revised guidance seeks to acknowledge the balance needed between extending the role of an Independent Examiner to encompass the ever-increasing regulatory requirements for charities and maintaining public trust and confidence in the Sector.
Key changes to the proposed new directions include:
- Removal of the expectation that trustees would have approved the financial statements prior to independent examination – after all, we often work with our clients to help enhance their accounts document as we examine, don’t we?
- Removal of the expectation upon examiners to be aware of all of the Charity Commission’s guidance when reporting to the Commission
- New guidance on the examination of group accounts for the first time
- Guidelines around where the examiner provides other services to the charity yet may still carry out the examination
- Some of the proposed ‘should’ wording changed to ‘recommended’ only
- Publication of a standard Independent Examination checklist (CC32a)
- Guidance on fund accounting for examiners reviewing receipts and payments accounts who are unfamiliar with the fund accounting requirements of SORP 2015
- Consideration of conflicts of interest by trustees – this was limited to consideration of the disclosure of related party transactions where accruals accounts are prepared only
- Consideration of the trustees’ assumptions concerning the financial sustainability of the charity – revising to address the role of trustees in considering financial circumstances at the time that accounts are prepared.
Access all updated documents here.
OSCR blog watch
The Office of the Scottish Charity Regulator (OSCR) has published statistics around the viewing of online charity accounts and returns. From April to July 2017, there were 12,455 views of charity accounts published by the Regulator on its website. In total, annual reports and accounts from over 4,300 different charities were viewed.
OSCR publishes all reports and accounts for charities with income over £25,000 and all Scottish Charitable Incorporated Organisations (CIOs).
OSCR Chief Executive David Robb said: “Charities need to be aware of the strong interest in their reports and accounts and they should use their reports as a platform to show their impact.
“Making this information available to the public has been a worthwhile innovation for the Regulator: we know how important transparency is in building public trust.
“We hope that charities will continue to support this work by putting their annual reports and accounts on their own website. This will allow them to provide more information about the work they are doing and the positive impact they have in their communities.
“To help charities better demonstrate their impact through reporting, we will be providing further guidance on producing Trustee Annual Reports in the coming months.”
Here’s our monthly round-up of (and links to) key consultation opportunities and those closed, pending feedback.
The following consultations are currently open and inviting a response:
- Charity Tax Group: Potential new Welsh taxes - opened 5 July 2017. The Welsh Government finance secretary will suggest that taxation could be used to change behaviours or to discourage activity which has negative social impacts. Email [email protected] to get involved. A shortlist of ideas will be considered in Autumn 2017
- Charity Commission for England and Wales: Annual return 2018 opened 1 September 2017, and will close 5pm on 24 November 2017. Changes apply to charities’ financial years starting on or after 1 January 2018.
- OSCR: Fundraising draft guidance consultation – opened 7 September 2017, and will close 1 December 2017. The response is split into two parts:
The following consultations are closed with feedback analysis pending. Watch this space for an update in future briefings:
Charity Commission for England and Wales:
- Reporting serious incidents in charities: Closed on 12 January 2017
- Annual return 2017: Closed on 9 March 2017 – see above for second follow-up consultation launched re 2018 return.
- The use and promotion of complementary and alternative medicine (CAM): making decisions about charitable status – closed on 19 May 2017. This consultation is about the Commission’s approach to deciding whether an organisation which uses or promotes CAM therapies is a charity. The Commission has released a statement, following receipt of over 600 responses:
“The Commission had planned to publish an analysis of the consultation in early August. However, the high volume of submissions means it has not been possible to prepare the analysis in that timeframe. We will continue our work on the review and plan to publish our analysis later in 2017.”
- Northern Ireland Executive review of business rates closed 16 February 2017. All the changes proposed in this paper require changes to legislation, which are approved by the NI Assembly. For this reason, the earliest the measures can start to be introduced is the start of the financial year after next: 1 April 2018.
- Charity Tax Group – taxation of employee expenses – closed 10 July 2017 – you can review the key consultation objectives and questions here.
- HMRC withdrawal of statutory concessions – closed on 7 March 2017
- HMRC: Draft legislation: the Value Added Tax (Refund of Tax to Museums and Galleries) (Amendment) Order 2017 – published 27 March 2017, closed on 21 April 2017
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Jen is a Fellow of the Association of Chartered Certified Accountants (FCCA) and the founder and managing director of Gerrard Financial Consulting, a specialist accounting firm for the charitable sector. She has over 17 years’ experience working in accounting and finance and has also worked as an accountancy tutor for a leading training...