Share

Registration, reporting and audit thresholds raised in Charities Act review

Registration, reporting and audit thresholds raised in Charities Act review
News

Registration, reporting and audit thresholds raised in Charities Act review

Finance | Tania Mason | 16 Jul 2012

Nearly 4,000 charities could be spared the expense of a full audit if Lord Hodgson’s advice to increase the audit income threshold from £500,000 to £1m is adopted by ministers.

The recommendation is contained in Lord Hodgson’s review of the Charities Act 2006, which also suggests changes to the income thresholds for charity registration and reporting requirements.

Hodgson said:  “A full audit is an expensive and time-consuming exercise and although it is right that large organisations should submit to this level of scrutiny, the current threshold of £500,000 seems a low level at which to impose this requirement. A level of £1m draws a better balance.”

And the ‘asset test’ that subjects organisations with assets of over £3.26m to audit scrutiny should be removed too.

Registration threshold raised by £20,000

Hodgson said he wanted to strike the right balance between avoiding tying up small charities in too much red tape, while also ensuring that unregistered charities are not disadvantaged.

The income threshold for registration should therefore be raised to £25,000 per year, but charities with lower incomes can still register if they wish. And any charity that wishes to claim tax relief from HMRC must be on the register irrespective of their income.

All charities that are registered should be required to send their accounts to the Commission, while all charities that are not on the register should be required to disclose this fact on their letterheads and in all their fundraising materials and cheques.

And, all registered charities with an annual income of less than £25,000 should be identified on the Commission’s register as ‘small’ alongside their registration number. “The intention of this is to improve the public perception that these charities are subject to little proactive regulatory oversight – and alert potential donors to this fact.”

But the new threshold proposal did not find favour with the NCVO.  CEO Sir Stuart Etherington said: “This would risk shunting a large tranche of charities outside of the Charity Commission’s regulatory remit and injudiciously bolster the powers of HMRC over this group.”

Lord Hodgson also wants to address the transparency imbalance between registered charities and excepted charities, by continuing to lower the income threshold at which excepted charities must register. Within three years this threshold should reach £25,000, he said.

In Hodgson’s discussions with the sector for the review, the Standard Information Return was criticised as a duplication of information that can be found elsewhere, and he agreed it should be ditched.

Automated checks on charity accounts

He also suggested that the Charity Commission should look at installing IT systems that can conduct automatic basic validity checks on submitted accounts to make it easier to identify organisations with particular risks.

Charities would have to answer certain standard questions on their submitted documents, such as the proportion of government funding they receive, whether their trustees are paid and whether it is a member of the Fundraising Standards Board.

Such a system is already used by Companies House.

“If the business case is proven, I would very much hope that HM Treasury would commit to funding this important endeavour,” Lord Hodgson wrote.

Comments

[Cancel] | Reply to:

Close »

Community Standards

The civilsociety.co.uk community and comments board is intended as a platform for informed and civilised debate.

We hope to encourage a broad range of views, however, there are standards that we expect commentators to uphold. We reserve the right to delete or amend any comments that do not adhere to these standards.

We welcome:

  • Robust but respectful debate
  • Strongly held opinions
  • Intelligent relevant discussion
  • The sharing of relevant experiences
  • New participants

We will not publish:

  • Rude, threatening, offensive, obscene or abusive language, or links to such material
  • Links to commercial organisations or spam postings. The comments board is not an advertising platform
  • The posting of contact details for yourself or others
  • Comments intended for malicious purpose or mindless abuse
  • Comments purporting to be from another person or organisation under false pretences
  • Gratuitous criticism, commentary or self-promotion
  • Any material which breaches copyright or privacy laws, or could be considered libellous
  • The use of the comments board for the pursuit or extension of personal disputes

Be aware:

  • Views expressed on the comments board are left at users’ discretion and are in no way views held or supported by Civil Society Media
  • Comments left by others may not be accurate, do not rely on them as fact
  • You may be misunderstood - sarcasm and humour can easily be taken out of context, try to be clear

Please:

  • Enjoy the opportunity to express your opinion and respect the right of others to express theirs
  • Confine your remarks to issues rather than personalities

Together we can keep our community a polite, respectful and intelligent platform for discussion.

Free eNews

Wellcome Trust's investment portfolio reaches £18bn

19 Dec 2014

The Wellcome Trust has posted a 15.4 per cent return on its investment portfolio, earning £2.5bn for...

HMRC tax statistics suggest large rise in charitable giving

19 Dec 2014

Tax relief on giving is expected to rise by 11 per cent in the year to March 2015, suggesting a large...

Andrew O’Brien moves from NCVO to head CFG’s policy team

19 Dec 2014

Andrew O’Brien is to join the Charity Finance Group as head of policy and public affairs.

Camelot CEO says deregulation of society lotteries may not increase good cause money

18 Dec 2014

The chief executive of Camelot has said that reducing the regulation around society lotteries may not...

Ukip supporters trust charities less than other voters do, NPC study finds

18 Dec 2014

A survey by Ipsos Mori for NPC about how charities are perceived by people who vote for various political...

Tobin Aldrich leaves Sightsavers to set up consultancy

17 Dec 2014

Former director of global fundraising for Sightsavers, Tobin Aldrich, has announced that he has left the...

CRUK crowdfunding effort flops

15 Dec 2014

Cancer Research UK’s three new crowdfunding campaigns did not manage to raise even 10 per cent of the...

Volunteering platform Do-it relaunches

12 Dec 2014

Online volunteering platform Do-it has been relaunched today by its new owner, the Do-it Trust, with more...

‘The challenge is getting people to use IT systems’

28 Nov 2014

Whatever type of customer-relationship management system charities use, the biggest challenge is convincing...

Join the discussion

Twitter
 
Training

Attending our one day courses is a highly effective way of ensuring new and existing trustees fully understand their role, responsibilities and liabilities.

>> Find out more <<