Treasury sets date for consolidation of charitable funds into NHS balance sheets 1

Finance | Gareth Jones | 30 Jun 2011

The Treasury has confirmed that it is to press ahead with the requirement that the funds of NHS charities be included on NHS balance sheets.

The date for the change has been set at 1 April 2013, a decision on which had originally been deferred last year following opposition from the Association of NHS Charities and the Charity Commission.

In January 2010, then-health minister Phil Hope gave assurances that the change would never happen, while the Charity Commission called it “wholly inappropriate”.

The change has been prompted by the need to comply with International Financial Reporting Standards.

Majority view in favour

Stuart Reynolds, deputy chair of the Association of NHS Charities, said his body had been represented on the Treasury review group which considered the issue and had opposed the changes, but the majority view had been in favour.

“There is a dissenting report on our website where we argue the reasons that we think consolidation is not appropriate for funds of NHS charities.

“Having said that however, the accounting standard applies to the accounts of the NHS body that’s related to the charity, not to the charity itself.

“Therefore it doesn’t affect us as charities or the accounts we provide for the Charity Commission, and it doesn’t affect the independence of trustees to act in the interests of the charity and of its beneficiaries.”

He added: “Its something we’re disappointed about and we think it sends the wrong message but its practical effect should be limited.”

A spokeswoman for the Commission reiterated that the Commission had opposed the change, but added: “The Commission welcomes the deferral of implementation to allow time for NHS reorganisation and for the trusteeship of NHS charitable funds to receive further consideration.

“We particularly welcome the importance of the separate disclosure of charitable funds within the group accounts of NHS Bodies recommended by the Panel – this is vital to transparency and understanding.”

Directory: Charity Commission

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Nick Brooks
Head of Not for profit
Kingston Smith LLP
30 Jun 2011

No one disputes that the correct purest accounting treatment is to consolidate. However, logic should tell us something else. When the FD of the NHS says she will need to de-consolidate the charities accounts before they can be presented to the Houses of Parliament, one wonders where the commonsense has gone. I could go on but it makes me angry. I don't think this type of pedantic approach does the accounting profession any good.

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