Four accountancy bodies have written to Matt Hancock to express their concern about a delay in updating charity accounting rules in England and Wales, which is causing “unnecessary confusion and regulatory complication”.
ICAS, ACCA, CIPFA and ICAEW are calling for the reform of charity accounting rules in England and Wales to now be made as a matter of urgency and have written to the secretary of state for Digital, Culture, Media and Sport to express concern about the UK government’s continued delay in updating the charity accounting regulations applicable in England and Wales.
The accountancy bodies are concerned that the 2008 Accounting Regulations have not been updated to refer to the Charities SORP (FRS 102), meaning that some charities are required by law to comply with the out of date SORP 2005.
They say that the SORP 2005 is based on accounting standards which have now been withdrawn by the UK Financial Reporting Council, so the charities affected are now in the extraordinary position of being required by regulation to comply with outdated accounting rules.
The Charity Commission said, in its publication Charity reporting and accounting: the essentials (CC15d), that charities could get around this by using the principle of a ‘true and fair override’, which is a permitted means of departing from the 2008 Regulations.
Christine Scott, head of charities and pensions at ICAS, said in a statement: “This has created an incongruous situation where charities are being actively encouraged by the Charity Commission to depart from secondary legislation. Moreover, such departures must be disclosed and explained by notes to the accounts. It is challenging enough for charity trustees to understand all their “normal” financial reporting obligations without adding the complications of a ‘true and fair override’.
“This issue has now been outstanding for more than three years, so we are asking the Secretary of State to free charities as a matter of urgency from this unnecessary and confusing regulatory complication. The corresponding regulations for charities in Scotland and Northern Ireland were made in good time.”