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Charity Accounts & Reporting in Scotland PowerPoint PPT Presentation

Charity Accounts & Reporting in Scotland 2006 Charity Accounts & Reporting New and enhanced accounting and reporting regime for charities in Scotland Revised requirements apply to all accounts for financial year beginning on or after 1 st April 2006. Setting the Scene

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Charity Accounts & Reporting in Scotland

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Charity Accounts & Reporting in Scotland

2006


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Charity Accounts & Reporting

  • New and enhanced accounting and reporting regime for charities in Scotland

  • Revised requirements apply to all accounts for financial year beginning on or after 1st April 2006.


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Setting the Scene

  • Approximately 21,000 live charities in Scotland

  • Most of these are very small

  • 66.5% have less than £25,000 income

  • 4.5% have more than £500,000 income

  • 600 English charities operating in Scotland – most being large, UK wide charities


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Context

Importance of recognising the legal & social

context within which charities operate:

  • Enhanced public interest in charity affairs

  • Enhanced scrutiny of activities & finances

  • Information widely available & instantly transferable

  • Press interest & media comment widespread


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Key Elements of New Charity Law

  • Establishment of new legal basis for OSCR & its monitoring & supervisory powers over charities in Scotland

  • A compulsory charity return

  • Enhanced accounting & reporting obligations

  • Public filing obligations for charities


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Charity Annual Returns

  • All charities must file Annual Return

  • Charities with £25k or above must also complete Monitoring Return

  • 2005 pilot exercise – 17,000 returns

  • If Charity is also a Company, Company Return still has to be completed


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Accounting Records

  • Adequate records to show & explain transactions.

  • Indicate assets and liabilities

  • Disclose charity’s financial position & funds

  • Trustees responsible for safe custody of day to day accounting records if charity ceases

  • Accounts must be kept for minimum of 6 years

  • OSCR to be notified of whereabouts.


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Form & Basis of Annual Accounts

  • Must comply with Charities SORP 2005

  • Unincorporated charities – less than £100k income – receipts & payments basis.

  • Charitable companies, industrial & provident societies and in due course Scottish Charitable Incorporated Organisations must prepare accrued accounts.

  • SCIO registration not until Summer 2007.


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Compulsory Audit & Exemptions

  • General exemption from audit – Charities with less than £500k income

  • Less than £500k - Independent examination (Unincorporated charities) BUT enhanced qualification criteria for examining accrued accounts of charities with between £100k and £500k income


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Compulsory Audit & Exemptions

  • Charitable Companies – use exemption if income below £500k & assets not more than £2.8m

  • Income between £90k & £500k – independent report from “reporting accountant”

  • Under £90k – independent examination


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Filing Time Limits

  • Annual accounts & reports must be filed with OSCR within nine months of financial year end.

  • If charitable company, accounts & reports must be filed with Companies House within ten months of financial year end.

  • If “foreign charity” obligations to OSCR and regulator in their home territory.


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Whistleblowing

  • Duty on charity auditors & independent examiners to report to OSCR any matters of concern.

  • Obligation arises when something of material significance to the exercise of OSCR’s functions is detected in the charity’s affairs or activities.


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Penalties

  • Legislation imposes penalty regime

  • Largely based on potential criminal fines against charity and its trustees.

  • Charitable companies still subject to Company Law penalty regime too.

  • Possibility of disqualification.


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Purpose & Effect of New Regime

  • Provide rules & requirements designed to suit Scottish charity sector.

  • Enhanced obligations will encourage greater transparency & accountability

  • Annual accounts and reports will provide greater breadth and depth of information about charities’ financial affairs, their activities & achievements.


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Summary

  • General and coherent regime provides greater consistency & clarity of reporting.

  • Beneficial to regulatory bodies and to funders, donors and other stakeholders, including general public.

  • OSCR will use monitoring & enforcing abilities to encourage and if necessary enforce compliance.

  • Key role for support agencies to assist charities to understand and meet the requirements.


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