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

83

 

155     

Power of Commission to direct compliance with certain regulations

If any person fails to afford an auditor or an independent examiner or examiner

any facility to which the auditor, independent examiner or examiner is entitled

by virtue of section 154(1)(d) or (e), the Commission, for securing that the

default is made good, may by order give such directions as it thinks

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appropriate—

(a)   

to that person,

(b)   

if the audit or examination is of individual accounts, to the charity

trustees for the time being of the charity concerned, or

(c)   

if the audit or examination is of group accounts, to the charity trustees

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for the time being of such member of the group as the Commission

thinks appropriate.

Duty of auditors etc. to report matters to Commission

156     

Duty of auditors etc. to report matters to Commission

(1)   

This section applies to a person (“P”) who—

15

(a)   

is acting as an auditor or independent examiner appointed by or in

relation to a charity under sections 144 to 146 (audit or examination of

individual accounts),

(b)   

is acting as an auditor or examiner appointed under section 149(2) or (3)

(audit or examination of English NHS charity accounts), or

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(c)   

is the Auditor General for Wales acting under section 150(2) or (3)

(audit or examination of Welsh NHS charity accounts).

(2)   

If, in the course of acting in the capacity mentioned in subsection (1), P becomes

aware of a matter—

(a)   

which relates to the activities or affairs of the charity or of any

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connected institution or body, and

(b)   

which P has reasonable cause to believe is likely to be of material

significance for the purposes of the exercise by the Commission of its

functions under the provisions mentioned in subsection (3),

   

P must immediately make a written report on the matter to the Commission.

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(3)   

The provisions are—

(a)   

sections 46, 47 and 50 (inquiries by Commission);

(b)   

sections 76 and 79 to 82 (Commission’s powers to act for protection of

charities).

(4)   

If, in the course of acting in the capacity mentioned in subsection (1), P becomes

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aware of any matter—

(a)   

which does not appear to P to be one that P is required to report under

subsection (2), but

(b)   

which P has reasonable cause to believe is likely to be relevant for the

purposes of the exercise by the Commission of any of its functions,

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P may make a report on the matter to the Commission.

(5)   

Where the duty or power under subsection (2) or (4) has arisen in relation to P

when acting in the capacity mentioned in subsection (1), the duty or power is

not affected by P’s subsequently ceasing to act in that capacity.

 
 

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

84

 

(6)   

Where P makes a report as required or authorised by subsection (2) or (4), no

duty to which P is subject is to be regarded as contravened merely because of

any information or opinion contained in the report.

157     

Meaning of “connected institution or body” in s.156(2)

(1)   

In section 156(2) “connected institution or body”, in relation to a charity,

5

means—

(a)   

an institution which is controlled by, or

(b)   

a body corporate in which a substantial interest is held by,

   

the charity or any one or more of the charity trustees acting as such.

(2)   

Sections 351 and 352 (meaning of controlled institution and substantial

10

interest) apply for the purposes of subsection (1).

158     

Application of duty in relation to auditors etc. of group accounts

(1)   

Subsections (2) to (6) of section 156 (duty of auditors etc. of individual accounts

to report matters to Commission) apply in relation to a person appointed to

audit, or report on, any group accounts under sections 151 to 153 as they apply

15

in relation to the person referred to in section 156 as “P”.

(2)   

In section 156(2)(a), as it applies in accordance with subsection (1), the

reference to the charity or any connected institution or body is to be read as a

reference to the parent charity or any of its subsidiary undertakings.

159     

Application of duty in relation to Companies Act auditors

20

(1)   

Sections 156(2) to (6) and 157 (duty of auditors etc. of individual accounts to

report matters to Commission) apply in relation to a person acting as a

Companies Act auditor of a charitable company as they apply in relation to the

person referred to in section 156 as “P”, but reading any reference to P’s acting

in the capacity mentioned in section 156(1) as a reference to the person acting

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as a Companies Act auditor.

(2)   

In subsection (1), “Companies Act auditor” means an auditor appointed under

Chapter 2 of Part 16 of the Companies Act 2006 (appointment of auditors).

Exempt and excepted charities

160     

Exempt charities

30

(1)   

Nothing in sections 144 to 155 (audit or examination of accounts) applies to an

exempt charity.

(2)   

Sections 156(2) to (6) and 157 (duty of auditors etc. of individual accounts to

report matters to Commission) apply in relation to a person appointed to audit,

or report on, the accounts of an exempt charity which is not a company as they

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apply in relation to the person referred to in section 156 as “P”, but reading—

(a)   

any reference to P’s acting in the capacity mentioned in section 156(1)

as a reference to the person acting as a person so appointed, and

(b)   

any reference to the Commission or to any of its functions as a reference

to the charity’s principal regulator or to any of the latter’s functions as

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principal regulator in relation to the charity.

 
 

Charities Bill [HL]
Part 8 — Charity accounts, reports and returns
Chapter 4 — Annual reports and returns and public access to accounts etc.

85

 

(3)   

Nothing in section 158 (duty of auditors etc. in relation to group accounts)

applies to an exempt charity.

161     

Excepted charities

(1)   

Nothing in sections 144 to 146 (audit or examination of individual accounts)

applies to any charity which—

5

(a)   

falls within section 30(2)(d) (whether or not it also falls within section

30(2)(b) or (c)), and

(b)   

is not registered.

(2)   

Except in accordance with subsections (3) and (4), nothing in—

(a)   

section 154 or 155 (regulations relating to audits and examinations), or

10

(b)   

section 156 or 157 (duty of auditors etc. to report matters to

Commission),

   

applies to a charity mentioned in subsection (1).

(3)   

Sections 154 to 157 apply to a charity mentioned in subsection (1) which is

also—

15

(a)   

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

(b)   

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

(4)   

Sections 156 and 157 apply in accordance with section 160(2) to a charity

mentioned in subsection (1) which is also an exempt charity.

Chapter 4

20

Annual reports and returns and public access to accounts etc.

Annual reports etc.

162     

Charity trustees to prepare annual reports

(1)   

The charity trustees of a charity must prepare in respect of each financial year

of the charity an annual report containing—

25

(a)   

such a report by the trustees on the activities of the charity during that

year, and

(b)   

such other information relating to the charity or to its trustees or

officers,

   

as may be prescribed by regulations made by the Minister.

30

(2)   

Regulations under subsection (1) may in particular make provision—

(a)   

for any such report as is mentioned in subsection (1)(a) to be prepared

in accordance with such principles as are specified or referred to in the

regulations;

(b)   

enabling the Commission to dispense with any requirement prescribed

35

by virtue of subsection (1)(b)—

(i)   

in the case of a particular charity or a particular class of

charities, or

(ii)   

in the case of a particular financial year of a charity or of any

class of charities.

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Charities Bill [HL]
Part 8 — Charity accounts, reports and returns
Chapter 4 — Annual reports and returns and public access to accounts etc.

86

 

163     

Transmission of annual reports to Commission in certain cases

(1)   

Where a charity’s gross income in any financial year exceeds £25,000, a copy of

the annual report required to be prepared under section 162 in respect of that

year must be transmitted to the Commission by the charity trustees within—

(a)   

10 months from the end of that year, or

5

(b)   

such longer period as the Commission may for any special reason allow

in the case of that report.

(2)   

Where a charity’s gross income in any financial year does not exceed £25,000,

a copy of the annual report required to be prepared under section 162 in respect

of that year must, if the Commission so requests, be transmitted to it by the

10

charity trustees—

(a)   

in the case of a request made before the end of 7 months from the end

of the financial year to which the report relates, within 10 months from

the end of that year, and

(b)   

in the case of a request not so made, within 3 months from the date of

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the request,

   

or, in either case, within such longer period as the Commission may for any

special reason allow in the case of that report.

(3)   

In the case of a charity which is constituted as a CIO—

(a)   

the requirement imposed by subsection (1) applies whatever the

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charity’s gross income is, and

(b)   

subsection (2) does not apply.

164     

Documents to be transmitted with annual report

(1)   

Subject to subsection (3), any copy of an annual report transmitted to the

Commission under section 163 must have attached to it—

25

(a)   

a copy of the statement of accounts prepared for the financial year in

question under section 132(1), or

(b)   

(as the case may be) a copy of the account and statement so prepared

under section 133,

   

and a copy of the relevant auditor’s or examiner’s report.

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(2)   

In subsection (1), “the relevant auditor’s or examiner’s report” means—

(a)   

if the accounts of the charity for that year have been audited under

section 144, 145, 146, 149 or 150, the report made by the auditor on that

statement of accounts or (as the case may be) on that account and

statement;

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(b)   

if the accounts of the charity for that year have been examined under

section 145, 149 or 150, the report made by the person carrying out the

examination.

(3)   

Subsections (1) and (2) do not apply to a charitable company, and any copy of

an annual report transmitted by the charity trustees of a charitable company

40

under section 163 must have attached to it—

(a)   

a copy of the company’s annual accounts prepared for the financial

year in question under Part 15 of the Companies Act 2006, and

(b)   

a copy of the relevant auditor’s or examiner’s report.

(4)   

In subsection (3), “the relevant auditor’s or examiner’s report” means—

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Charities Bill [HL]
Part 8 — Charity accounts, reports and returns
Chapter 4 — Annual reports and returns and public access to accounts etc.

87

 

(a)   

if the accounts of the company for that year have been audited under

Part 16 of the Companies Act 2006, the report made by the auditor on

those accounts;

(b)   

if the accounts of the company for that year have been audited under

section 144, 145 or 146, the report made by the auditor on those

5

accounts;

(c)   

if the accounts of the company for that year have been examined under

section 145, the report made by the person carrying out the

examination.

165     

Preservation of annual reports etc.

10

(1)   

Any copy of an annual report transmitted to the Commission under section

163, together with the documents attached to it, is to be kept by the

Commission for such period as it thinks fit.

(2)   

The charity trustees of a charity must preserve for at least 6 years from the end

of the financial year to which it relates an annual report prepared by them

15

under section 162(1) if they have not been required to transmit a copy of it to

the Commission.

(3)   

Subsection (4) applies if a charity ceases to exist within the period of 6 years

mentioned in subsection (2) as it applies to any annual report.

(4)   

The obligation to preserve the annual report in accordance with subsection (2)

20

must continue to be discharged by the last charity trustees of the charity, unless

the Commission consents in writing to the annual report being destroyed or

otherwise disposed of.

166     

Annual reports and group accounts

(1)   

This section applies where group accounts are prepared for a financial year of

25

a parent charity under section 138(2).

(2)   

The annual report prepared by the charity trustees of the parent charity in

respect of that year under section 162 must include—

(a)   

such a report by the trustees on the activities of the charity’s subsidiary

undertakings during that year, and

30

(b)   

such other information relating to any of those undertakings,

   

as may be prescribed by regulations made by the Minister.

(3)   

Regulations under subsection (2) may in particular make provision—

(a)   

for any such report as is mentioned in subsection (2)(a) to be prepared

in accordance with such principles as are specified or referred to in the

35

regulations;

(b)   

enabling the Commission to dispense with any requirement prescribed

by virtue of subsection (2)(b) in the case of—

(i)   

a particular subsidiary undertaking, or

(ii)   

a particular class of subsidiary undertakings.

40

(4)   

Section 163 (transmission of annual report to Commission in certain cases)

applies in relation to the annual report referred to in subsection (2) as if any

reference to the charity’s gross income in the financial year in question were a

reference to the aggregate gross income of the group in that year.

 
 

Charities Bill [HL]
Part 8 — Charity accounts, reports and returns
Chapter 4 — Annual reports and returns and public access to accounts etc.

88

 

(5)   

When transmitted to the Commission in accordance with subsection (4), the

copy of the annual report must have attached to it both a copy of the group

accounts prepared for that year under section 138(2) and—

(a)   

a copy of the report made by the auditor on those accounts, or

(b)   

if those accounts have been examined under section 152, a copy of the

5

report made by the person carrying out the examination.

(6)   

The requirements in this section are in addition to those in sections 162 to 165.

167     

Exempt charities

Nothing in sections 162 to 166 (annual reports etc.) applies to any exempt

charity.

10

168     

Excepted charities

(1)   

Nothing in sections 162 to 165 (annual reports etc.) applies to any charity

which—

(a)   

falls within section 30(2)(d) (whether or not it also falls within section

30(2)(b) or (c)), and

15

(b)   

is not registered.

(2)   

Except in accordance with subsection (5), nothing in sections 162 to 165 applies

to any charity which—

(a)   

falls within section 30(2)(b) or (c) but does not fall within section

30(2)(d), and

20

(b)   

is not registered.

(3)   

If requested to do so by the Commission, the charity trustees of any such

charity as is mentioned in subsection (2) must prepare an annual report in

respect of such financial year of the charity as is specified in the Commission’s

request.

25

(4)   

Any report prepared under subsection (3) must contain—

(a)   

such a report by the charity trustees on the activities of the charity

during the year in question, and

(b)   

such other information relating to the charity or to its trustees or

officers,

30

   

as may be prescribed by regulations made under section 162(1) in relation to

annual reports prepared under section 162(1).

(5)   

The following provisions apply in relation to any report required to be

prepared under subsection (3) as if it were an annual report required to be

prepared under section 162(1)—

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(a)   

section 163(1) (transmission of annual report in certain cases), with the

omission of the words preceding “a copy of the annual report”, and

(b)   

sections 164 (documents to be transmitted with annual report) and

165(1) (preservation of annual reports etc.).

(6)   

Subsections (7) and (8) apply where—

40

(a)   

a charity is required to prepare an annual report in respect of a financial

year by virtue of subsection (3),

(b)   

the charity is a parent charity at the end of the year, and

 
 

Charities Bill [HL]
Part 8 — Charity accounts, reports and returns
Chapter 4 — Annual reports and returns and public access to accounts etc.

89

 

(c)   

group accounts are prepared for that year under section 138(2) by the

charity trustees of the charity.

(7)   

When transmitted to the Commission in accordance with subsection (5), the

copy of the annual report must have attached to it both a copy of the group

accounts and—

5

(a)   

a copy of the report made by the auditor on those accounts, or

(b)   

if those accounts have been examined under section 152, a copy of the

report made by the person carrying out the examination.

(8)   

The requirement in subsection (7) is in addition to that in subsection (4).

Annual returns

10

169     

Annual returns by registered charities

(1)   

Subject to subsection (2), every registered charity must prepare in respect of

each of its financial years an annual return in such form, and containing such

information, as may be prescribed by regulations made by the Commission.

(2)   

Subsection (1) does not apply in relation to any financial year of a charity in

15

which the charity’s gross income does not exceed £10,000 (but this subsection

does not apply if the charity is constituted as a CIO).

(3)   

Any such return must be transmitted to the Commission by the date by which

the charity trustees are, by virtue of section 163(1), required to transmit to the

Commission the annual report required to be prepared in respect of the

20

financial year in question.

(4)   

The Commission may dispense with the requirements of subsection (1)—

(a)   

in the case of a particular charity or a particular class of charities, or

(b)   

in the case of a particular financial year of a charity or of any class of

charities.

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Availability of documents to public

170     

Public inspection of annual reports etc. kept by Commission

Any document kept by the Commission in pursuance of section 165(1)

(preservation of annual reports etc.) must be open to public inspection at all

reasonable times—

30

(a)   

during the period for which it is so kept, or

(b)   

if the Commission so determines, during such lesser period as it may

specify.

171     

Supply by charity trustees of copy of most recent annual report

(1)   

This section applies if an annual report has been prepared in respect of any

35

financial year of a charity in pursuance of section 162(1) or 168(3).

(2)   

If the charity trustees of a charity—

(a)   

are requested in writing by any person to provide that person with a

copy of its most recent annual report, and

 
 

 
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