More charities than initially thought are likely to fall into the most onerous tier of the Accounting Standards Board's proposed framework for charity accounting, according to PricewaterhouseCoopers.
Charities with listed debt or which are holding other organisations’ money in a fiduciary capacity are considered to be publicly accountable and will therefore be required to use the tier 1 framework, which involves significantly more disclosure than the FRSME (Financial Reporting Standard for Mid-Sized Entities).
Speaking to civilsociety.co.uk, Ian Dixon, head of the charities technical team at PwC, said he didn’t believe a lot of charities had considered whether they fell in the category of holding other organisations' money in a fiduciary capacity, and that the framework may also be of concern to charities considering a debt listing in order to raise funds.
“We initially thought it would be only one or two charities that would fall into this group, but it actually when you start to think about those two particular areas, there could be a number more.
“We’re never going to be talking about hundreds of them, my suspicion is it might be a small number of tens, but compared to the one or two we thought there might be initially this would be a change.”
He added: “It’s considerably more onerous, the rulebook runs to several thousand pages rather than 400. They would have to be working to the framework that applies to UK PLCs.
“The look and feel of the accounts may well be substantially different to a charity that was in tier 2.”
Major UK charities
Charities which may fall in this category are the Wellcome Trust, which issued £275m in bonds in 2009, and the Charities Aid Foundation, whose banking operations hold significant sums on behalf of other organisations.
A spokesman for CAF said: “We are reviewing the new regulations in conjunction with advisers but currently our expectation is that we will be probably be ‘tier 1’ for CAF Bank and also probably for CAF too, as we are a major UK charity.”
A spokeswoman for the Wellcome Trust said the issue was under consideration, but no decision had yet been reached as to what category the charity would fall into.
