Session 2010 - 12
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Charities Bill [HL]


Charities Bill [HL]
Part 8 — Charity accounts, reports and returns
Chapter 3 — Audit or examination of accounts

75

 

Chapter 3

Audit or examination of accounts

Audit or examination of individual accounts

144     

Audit of accounts of larger charities

(1)   

Subsection (2) applies to a financial year of a charity if—

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(a)   

the charity’s gross income in that year exceeds £500,000, or

(b)   

the charity’s gross income in that year exceeds the accounts threshold

and at the end of the year the aggregate value of its assets (before

deduction of liabilities) exceeds £3.26 million.

   

“The accounts threshold” means the sum for the time being specified in section

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133 (account and statement an option for lower-income charities).

(2)   

If this subsection applies to a financial year of a charity, the accounts of the

charity for that year must be audited by a person who—

(a)   

is eligible for appointment as a statutory auditor under Part 42 of the

Companies Act 2006, or

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(b)   

is a member of a body for the time being specified in regulations under

section 154 and is under the rules of that body eligible for appointment

as auditor of the charity.

145     

Examination of accounts an option for lower-income charities

(1)   

If section 144(2) does not apply to a financial year of a charity but its gross

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income in that year exceeds £25,000, the accounts of the charity for that year

must, at the election of the charity trustees, be—

(a)   

examined by an independent examiner, that is, an independent person

who is reasonably believed by the trustees to have the requisite ability

and practical experience to carry out a competent examination of the

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accounts, or

(b)   

audited by a person within section 144(2)(a) or (b).

(2)   

Subsection (1) is subject to—

(a)   

subsection (3), and

(b)   

any order under section 146(1).

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(3)   

If subsection (1) applies to the accounts of a charity for a year and the charity’s

gross income in that year exceeds £250,000, a person qualifies as an

independent examiner for the purposes of subsection (1)(a) if (and only if) the

person is independent and—

(a)   

a member of one of the bodies listed in subsection (4), or

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(b)   

a Fellow of the Association of Charity Independent Examiners.

(4)   

The bodies referred to in subsection (3)(a) are—

(a)   

the Institute of Chartered Accountants in England and Wales;

(b)   

the Institute of Chartered Accountants of Scotland;

(c)   

the Institute of Chartered Accountants in Ireland;

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(d)   

the Association of Chartered Certified Accountants;

(e)   

the Association of Authorised Public Accountants;

(f)   

the Association of Accounting Technicians;

 
 

Charities Bill [HL]
Part 8 — Charity accounts, reports and returns
Chapter 3 — Audit or examination of accounts

76

 

(g)   

the Association of International Accountants;

(h)   

the Chartered Institute of Management Accountants;

(i)   

the Institute of Chartered Secretaries and Administrators;

(j)   

the Chartered Institute of Public Finance and Accountancy.

(5)   

The Commission may—

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(a)   

give guidance to charity trustees in connection with the selection of a

person for appointment as an independent examiner;

(b)   

give such directions as it thinks appropriate with respect to the carrying

out of an examination in pursuance of subsection (1)(a);

   

and any such guidance or directions may either be of general application or

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apply to a particular charity only.

(6)   

The Minister may by order—

(a)   

amend subsection (3) by adding or removing a description of person to

or from the list in that subsection or by varying any entry for the time

being included in that list;

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(b)   

amend subsection (4) by adding or removing a body to or from the list

in that subsection or by varying any entry for the time being included

in that list.

146     

Commission’s powers to order audit

(1)   

The Commission may by order require the accounts of a charity for a financial

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year to be audited by a person within section 144(2)(a) or (b) if it appears to the

Commission that—

(a)   

section 144(2), or (as the case may be) section 145(1), has not been

complied with in relation to that year within 10 months from the end of

that year, or

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(b)   

although section 144(2) does not apply to that year, it would

nevertheless be desirable for the accounts of the charity for that year to

be audited by a person within section 144(2)(a) or (b).

(2)   

If the Commission makes an order under subsection (1) with respect to a

charity, the auditor must be a person appointed by the Commission unless—

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(a)   

the order is made by virtue of subsection (1)(b), and

(b)   

the charity trustees themselves appoint an auditor in accordance with

the order.

(3)   

The expenses of any audit carried out by an auditor appointed by the

Commission under subsection (2), including the auditor’s remuneration, are

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recoverable by the Commission—

(a)   

from the charity trustees of the charity concerned, who are personally

liable, jointly and severally, for those expenses, or

(b)   

to the extent that it appears to the Commission not to be practical to

seek recovery of those expenses in accordance with paragraph (a), from

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the funds of the charity.

147     

Accounts required to be audited under Companies Act

(1)   

Nothing in sections 144 to 146 applies in relation to the accounts of a charitable

company for a financial year if those accounts are required to be audited in

accordance with Part 16 of the Companies Act 2006 (“Part 16 accounts”).

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Charities Bill [HL]
Part 8 — Charity accounts, reports and returns
Chapter 3 — Audit or examination of accounts

77

 

(2)   

In the case of a charitable company, the Commission may by order require that

the condition and Part 16 accounts of the company for such period as the

Commission thinks fit are to be investigated and audited by an auditor who—

(a)   

is eligible for appointment as a statutory auditor under Part 42 of the

Companies Act 2006, and

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(b)   

is appointed by the Commission.

(3)   

An auditor acting under subsection (2)—

(a)   

has a right of access to all books, accounts and documents relating to

the company which are in the possession or control of the charity

trustees or to which the charity trustees have access;

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(b)   

is entitled to require from any charity trustee, past or present, and from

any past or present officer or employee of the company such

information and explanation as the auditor thinks necessary for the

performance of the auditor’s duties;

(c)   

must at the conclusion or during the progress of the audit make such

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reports to the Commission about the audit or about the accounts or

affairs of the company as the auditor thinks the case requires, and must

send a copy of any such report to the charity trustees.

(4)   

The expenses of any audit under subsection (2) including the remuneration of

the auditor, are to be paid by the Commission.

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(5)   

If any person fails to afford an auditor any facility to which the auditor is

entitled under subsection (3), the Commission may by order give to that person

or to the charity trustees for the time being such directions as the Commission

thinks appropriate for securing that the default is made good.

148     

NHS charities: general

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Nothing in sections 144 to 146 applies in relation to a financial year of a charity

where, at any time in the year, it is—

(a)   

an English NHS charity (as defined in section 149), or

(b)   

a Welsh NHS charity (as defined in section 150).

149     

Audit or examination of English NHS charity accounts

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(1)   

This section applies in relation to a financial year of a charity where, at any time

in the year, it is an English NHS charity.

(2)   

If section 144(1)(a) or (b) is satisfied in relation to that financial year of the

charity, the accounts of the charity for that year must be audited by a person

appointed by the Audit Commission.

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(3)   

In any other case, the accounts of the charity for that financial year must, at the

election of the Audit Commission, be—

(a)   

audited by a person appointed by the Audit Commission, or

(b)   

examined by a person so appointed.

(4)   

Section 3 of the Audit Commission Act 1998 applies in relation to any

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appointment under subsection (2) or (3)(a).

(5)   

The Charity Commission may give such directions as it thinks appropriate

with respect to the carrying out of an examination in pursuance of subsection

(3)(b); and any such directions may either be of general application or apply to

a particular charity only.

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Charities Bill [HL]
Part 8 — Charity accounts, reports and returns
Chapter 3 — Audit or examination of accounts

78

 

(6)   

The Comptroller and Auditor General may at any time examine and inspect—

(a)   

the accounts of the charity for the financial year,

(b)   

any records relating to those accounts, and

(c)   

any report of a person appointed under subsection (2) or (3) to audit or

examine those accounts.

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(7)   

In this section, “English NHS charity” means a charitable trust, the trustees of

which are—

(a)   

a Strategic Health Authority,

(b)   

a Primary Care Trust,

(c)   

a National Health Service trust all or most of whose hospitals,

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establishments and facilities are situated in England,

(d)   

trustees appointed in pursuance of paragraph 10 of Schedule 4 to the

National Health Service Act 2006 for a National Health Service trust

falling within paragraph (c),

(e)   

special trustees appointed in pursuance of section 29(1) of the National

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Health Service Reorganisation Act 1973, section 95(1) of the National

Health Service Act 1977 and section 212(1) of the National Health

Service Act 2006 for such a National Health Service trust, or

(f)   

trustees for a Primary Care Trust appointed in pursuance of paragraph

12 of Schedule 3 to the National Health Service Act 2006.

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(8)   

In this Chapter “the Audit Commission” means the Audit Commission for

Local Authorities and the National Health Service in England.

150     

Audit or examination of Welsh NHS charity accounts

(1)   

This section applies in relation to a financial year of a charity where, at any time

in the year, it is a Welsh NHS charity.

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(2)   

If section 144(1)(a) or (b) is satisfied in relation to that financial year of the

charity, the accounts of the charity for that year must be audited by the Auditor

General for Wales.

(3)   

In any other case, the accounts of the charity for that financial year must, at the

election of the Auditor General for Wales, be audited or examined by the

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Auditor General for Wales.

(4)   

In this section “Welsh NHS charity” means a charitable trust, the trustees of

which are—

(a)   

a Local Health Board,

(b)   

a National Health Service trust all or most of whose hospitals,

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establishments and facilities are situated in Wales,

(c)   

trustees appointed in pursuance of paragraph 10 of Schedule 3 to the

National Health Service (Wales) Act 2006 for a National Health Service

trust falling within paragraph (b), or

(d)   

special trustees appointed in pursuance of section 29(1) of the National

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Health Service Reorganisation Act 1973, section 95(1) of the National

Health Service Act 1977 and section 160(1) of the National Health

Service (Wales) Act 2006 for such a National Health Service trust.

(5)   

References in this Act to an auditor or an examiner have effect in relation to this

section as references to the Auditor General for Wales acting under this section

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as an auditor or examiner.

 
 

 
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