An accountancy membership body has called for a broader review of financial regulations in the sector to ease burdens on small charities.
The Institute of Chartered Accountants in England and Wales (ICAEW) said in response to a recent government consultation on financial reporting thresholds in England and Wales that it should have been combined with the ongoing Uk-wide Charities Statement of Recommended Practice (SORP) review.
ICAEW’s response says differing audit thresholds across the UK and inconsistencies with how Companies House sets its thresholds cause complexities for charities.
“We believe that a fuller review of thresholds impacting the sector is required in future,” ICAEW’s response to the review, which closed yesterday, reads.
“We have received extensive and consistent feedback from charities and accountancy firms that the current regime is overly complex and that many charities struggle to understand which thresholds apply, in part because the underlying logic for them is unclear.
“The challenges impact smaller charities relatively more than large ones that may have dedicated compliance resource to better enable them to navigate the regulatory environment.”
Reviews ‘should have been considered in tandem’
ICAEW charity committee member Jen Richardson said. “I have significant concerns that the current SORP consultation and the DCMS consultation have not been considered in tandem.
“One of the key drivers behind both consultations is to reduce the burden on smaller charities and it is likely that we will actually increase the number of thresholds and have further points of differentiation on reporting requirements, particularly around the £500,000 income threshold.”
Fiona Condron, vice chair of ICAEW’s charity committee, said: “It was interesting to be involved in both this consultation and concurrently the consultation on the Charities SORP issued by the SORP-making body.
“There is clearly common ground between the two and therefore it would have been better if the issues could have been considered together.
“By way of example, a single consultation covering all the thresholds or with options in each taking into account options in the other, would have supported the overall simplification of reporting for smaller charities.”
Daniel Chan, chair of ICAEW’s charity committee, added: “This consultation is only a piece of the jigsaw in the overall charity regulatory landscape. A broader and more holistic view would help to support greater consistency and alignment across the range of requirements for different charities.”
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