Charities Bill [HL]

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
5
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
10
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
20
(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
25
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.
30
(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
35
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,
40

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
25
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
35
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
40
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.
40

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
15
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
20
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.
30
(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;
35
(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—
45

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)—
35
(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.
25
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