Charity accounting regulations delay

20th June, 2018

Accountancy professional bodies are calling for the government to address delays in updating charity accounting regulations, which they say are causing ‘unnecessary and confusing’ complications because they are not in line with the Financial Reporting Standard.

The four Accountancy bodies: ICAEW, CIPFA, ACCA and ICAS have written to Matt Hancock, secretary of state for Digital, Culture, Media and Sport, expressing concern about the government’s continued delay in updating the charity accounting regulations applicable in England and Wales.

They say the Charities (Accounts and Reports) Regulations 2008 have not been updated to refer to the charities statement of recommend practice (SORP) (FRS 102), meaning that some charities are required by law to comply with the out of date SORP 2005.

The SORP 2005 is based on accounting standards which have now been withdrawn by the Financial Reporting Council, so the letter points out that charities affected are now in the extraordinary position of being required by regulation to comply with outdated accounting rules.

The Charity Commission for England and Wales (CCEW) has suggested in its guidance 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, ICAS head of charities and pensions, said:

‘This has created an incongruous situation where charities are being actively encouraged by the CCEW 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.”

Get in Touch

How would you like to be contacted?

GDPR Consent

For more information read our privacy policy and terms and conditions.

More like this

Looking for more?
Insights
Get Regular Insights
Sign Up