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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
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.
setting the scene
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

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
key elements of new charity law
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
charity annual returns
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
accounting records
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.
form basis of annual accounts
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.
compulsory audit exemptions
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
compulsory audit exemptions10
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
filing time limits
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.
  • 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.
  • 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.
purpose effect of new regime
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.
  • 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.