Charities Bill [HL]

Session 2010 - 12
Internet Publications
Other Bills before Parliament

Charities Bill [HL]

Charities Bill [HL]
Part 8 — Charity accounts, reports and returns
Chapter 3 — Audit or examination of accounts
79

Audit or examination of group accounts
151
Audit of accounts of larger groups
(1)
This section applies where group accounts are prepared for a financial year of
a parent charity under section 138(2) and—
(a)
the aggregate gross income of the group in that year exceeds the
5
relevant income threshold (see section 176(1)), or
(b)
the aggregate gross income of the group in that year exceeds the
relevant income threshold and at the end of the year the aggregate
value of the assets of the group (before deduction of liabilities) exceeds
the relevant assets threshold (see section 176(2)).
10
(2)
This section also applies where—
(a)
group accounts are prepared for a financial year of a parent charity
under section 138(2), and
(b)
the appropriate audit provision applies in relation to the parent
charity’s own accounts for that year.
15
(3)
In this section “the appropriate audit provision”, in relation to a financial year
of a parent charity, means—
(a)
(subject to paragraph (b), (c) or (d)) section 144(2) (audit of accounts of
larger charities);
(b)
if section 149 (audit or examination of English NHS charity accounts)
20
applies in relation to that year, section 149(2);
(c)
if section 150 (audit or examination of Welsh NHS charity accounts)
applies in relation to that year, section 150(2);
(d)
if the parent charity is a company—
(i)
section 144(2), or
25
(ii)
(as the case may be) Part 16 of the Companies Act 2006.
(4)
If this section applies in relation to a financial year of a parent charity by virtue
of subsection (1) or (2), the group accounts for that year must be audited—
(a)
(subject to paragraph (b) or (c)) by a person within section 144(2)(a) or
(b);
30
(b)
if section 149 applies in relation to that year, by a person appointed by
the Audit Commission;
(c)
if section 150 applies in relation to that year, by the Auditor General for
Wales.
(5)
If this section applies in relation to a financial year of a parent charity by virtue
35
of subsection (1)—
(a)
(subject to paragraph (b)) the appropriate audit provision applies in
relation to the parent charity’s own accounts for that year (whether or
not it would otherwise so apply);
(b)
if the parent charity is a company and its own accounts for that year are
40
not required to be audited in accordance with Part 16 of the Companies
Act 2006, section 144(2) applies in relation to those accounts (whether
or not it would otherwise so apply).
(6)
Subsections (4) and (6) of section 149 apply in relation to any appointment
under subsection (4)(b) as they apply in relation to an appointment under
45
section 149(2).

Charities Bill [HL]
Part 8 — Charity accounts, reports and returns
Chapter 3 — Audit or examination of accounts
80

(7)
References in this Act to an auditor have effect in relation to subsection (4)(c)
as references to the Auditor General for Wales acting under subsection (4)(c) as
an auditor.
152
Examination of accounts an option for smaller groups
(1)
This section applies if—
5
(a)
group accounts are prepared for a financial year of a parent charity
under section 138(2), and
(b)
section 151 (audit of accounts of larger groups) does not apply in
relation to that year.
(2)
If—
10
(a)
this section applies in relation to a financial year of a parent charity,
(b)
the aggregate gross income of the group in that year exceeds the sum
specified in section 145(1), and
(c)
subsection (6) or (7) (NHS charity: group accounts) does not apply in
relation to it,
15

the group accounts for that year must, at the election of the charity trustees of
the parent charity, be examined by an independent examiner (as defined in
section 145(1)(a)) or audited by a person within section 144(2)(a) or (b).
(3)
Subsection (2) is subject to—
(a)
subsection (4), and
20
(b)
any order under section 153(1).
(4)
If subsection (2) applies to the group accounts for a year and the aggregate
gross income of the group in that year exceeds the sum specified in section
145(3), a person qualifies as an independent examiner for the purposes of
subsection (2) if (and only if) the person is independent and meets the
25
requirements of section 145(3)(a) or (b).
(5)
The Commission may—
(a)
give guidance to charity trustees of a parent charity 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
30
out of an examination in pursuance of subsection (2);

and any such guidance or directions may either be of general application or
apply to a particular charity only.
(6)
If—
(a)
this section applies in relation to a financial year of a parent charity, and
35
(b)
section 149 (audit or examination of English NHS charity accounts) also
applies in relation to that year,

the group accounts for that year must at the election of the Audit Commission
be audited by a person appointed by the Audit Commission or examined by a
person so appointed.
40

Subsections (4) to (6) of section 149 apply for the purposes of this subsection as
they apply for the purposes of section 149(3).
(7)
If—
(a)
this section applies in relation to a financial year of a parent charity, and
(b)
section 150 (audit or examination of Welsh NHS charity accounts) also
45
applies in relation to that year,

Charities Bill [HL]
Part 8 — Charity accounts, reports and returns
Chapter 3 — Audit or examination of accounts
81


the group accounts for that year must, at the election of the Auditor General for
Wales, be audited or examined by the Auditor General for Wales.

References in this Act to an auditor or an examiner have effect in relation to this
subsection as references to the Auditor General for Wales acting under this
subsection as an auditor or examiner.
5
(8)
If the group accounts for a financial year of a parent charity are to be examined
or audited in accordance with subsection (2), section 145(1) applies in relation
to the parent charity’s own accounts for that year (whether or not it would
otherwise so apply).
(9)
Nothing in subsection (6) or (7) affects the operation of section 149(3) to (6) or
10
(as the case may be) section 150(3) in relation to the parent charity’s own
accounts for the financial year in question.
153
Commission’s powers to order audit of group accounts
(1)
The Commission may by order require the group accounts of a parent charity
for a financial year to be audited by a person within section 144(2)(a) or (b) if it
15
appears to the Commission that—
(a)
section 151(4)(a), or (as the case may be) section 152(2), has not been
complied with in relation to that year within 10 months from the end of
that year, or
(b)
although section 151(4)(a) does not apply to that year, it would
20
nevertheless be desirable for the group accounts for that year to be
audited by a person within section 144(2)(a) or (b).

But this subsection does not apply if section 149 or 150 (audit or examination
of NHS charity accounts) applies in relation to the parent charity for that year.
(2)
If the Commission makes an order under subsection (1) with respect to group
25
accounts, the auditor must be a person appointed by the Commission unless—
(a)
the order is made by virtue of subsection (1)(b), and
(b)
the charity trustees of the parent charity themselves appoint an auditor
in accordance with the order.
(3)
The expenses of any audit carried out by an auditor appointed by the
30
Commission under subsection (2), including the auditor’s remuneration, are
recoverable by the Commission—
(a)
from the charity trustees of the parent charity, 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
35
seek recovery of those expenses in accordance with paragraph (a), from
the funds of the parent charity.
Regulations relating to audits and examinations
154
Regulations relating to audits and examinations
(1)
The Minister may by regulations make provision—
40
(a)
specifying one or more bodies for the purposes of section 144(2)(b);
(b)
with respect to the duties of an auditor carrying out an audit of
individual or group accounts, including provision with respect to the
making by the auditor of a report on—

Charities Bill [HL]
Part 8 — Charity accounts, reports and returns
Chapter 3 — Audit or examination of accounts
82

(i)
the statement of accounts prepared for the financial year in
question under section 132(1),
(ii)
the account and statement so prepared under section 133,
(iii)
the accounts so prepared under section 394 of the Companies
Act 2006 (duty to prepare individual accounts), or
5
(iv)
group accounts so prepared under section 138(2),

as the case may be;
(c)
with respect to the making of a report in respect of an examination of
individual or group accounts by the independent examiner or
examiner who has carried out the examination;
10
(d)
conferring on an auditor or on an independent examiner or examiner a
right of access with respect to books, documents and other records
(however kept) which relate to—
(i)
the charity (if the audit or examination is of individual
accounts), or
15
(ii)
any member of the group (if the audit or examination is of
group accounts);
(e)
entitling an auditor or an independent examiner or examiner to require
information and explanations from—
(i)
past or present charity trustees or trustees for, or past or present
20
officers or employees of, the charity (if the audit or examination
is of individual accounts), or
(ii)
past or present charity trustees or trustees for, or past or present
officers or employees of, any member of the group (if the audit
or examination is of group accounts);
25
(f)
enabling the Commission, in circumstances specified in the regulations,
to dispense with the requirements of section 144(2), 145(1), 151(4)(a) or
152(2)—
(i)
in the case of a particular charity, or
(ii)
in the case of any particular financial year of a charity.
30
(2)
Regulations under subsection (1)(e) may in particular make, in relation to
audits or examinations of group accounts, provision corresponding or similar
to any provision made by section 499 or 500 of the Companies Act 2006 in
connection with the rights exercisable by an auditor of a company in relation
to a subsidiary undertaking of the company.
35
(3)
In this section—
“audit of individual or group accounts” means an audit under—
(a)
section 144, 145, 146, 149 or 150 (individual accounts), or
(b)
section 151, 152 or 153 (group accounts);
“examination of individual or group accounts” means an examination
40
under—
(a)
section 145, 149 or 150 (individual accounts), or
(b)
section 152 (group accounts);

and the references in this section and section 155 to an audit or examination of
individual accounts and to an audit or examination of group accounts are to be
45
read accordingly.