3 Purpose of the proposal
17. The purpose of the proposal is to remove the
dual accounting burden identified above, whereby NHS charities
are obliged to submit accounts to the Secretary of State or National
Assembly for Wales, under section 98 of the National Health Service
Act 1977 (the 1977 Act), and to the Charity Commissioners under
the Charities Act 1993 (the 1993 Act). The proposal would amend
section 98 of the 1977 Act and make amendments to the 1993 Act
and the Audit Commission Act 1998 (the 1998 Act).
18. The Department proposes to remove the requirement
that NHS bodies should prepare separate accounts of NHS charities'
funds for submission to Government. The requirement for NHS charities
to submit accounts to the Charity Commission would be maintained,
subject to certain proposed changes to the audit regime. These
changes will apply in respect of NHS charities only.
19. NHS charities would, under the Charity Commission
regime, be required to submit accounts to the Commission within
10 months of the end of the financial year, consistent with other
charities which are subject to reporting requirements. The Department
states that this period is longer than that provided for under
the accounts directions issued by the Secretary of State for Health
under the 1977 Act.[19]
20. The changes to charity legislation which the
Department proposes should apply in the case of NHS charities
are as follows:
a) The 1993 Act will be amended in respect of
NHS charities to require their accounts to be audited (or in some
cases examined) by a person appointed by the Audit Commission.
The Department notes that Audit Commission auditors presently
audit the NHS Exchequer accounts for each NHS body. In many cases
these accounts are prepared using the same accounting systems
as NHS charities.
b) The auditors will be appointed by the Audit
Commission in accordance with section 3 of the Audit Commission
Act 1998, rather than in accordance with section 43(2) of the
1993 Act. Auditors under the 1993 Act are persons qualified under
the provisions of the Companies Act 1989 to audit the accounts
of companies. The Department has pointed out that "there
are no significant differences between the qualifications required
under both the Charities Act and the Audit Commission Act."
In the Department's opinion, the independent appointment of auditors
will provide an additional assurance to the public as to the proper
administration of charity funds.[20]
c) The Comptroller and Auditor General, or the
Auditor General for Wales, shall retain the right to examine the
accounts of NHS charities, any records relating to them, and any
report of an auditor or examiner appointed by the Audit Commission.
d) The provision in charity law exempting charitable
bodies with income and total expenditure of £10,000 or less
in a financial year from any financial scrutiny will not apply
to NHS charities. The Department believes that, as NHS charities
are administered by public bodies, it is appropriate that the
accounts of all NHS charities should be subject to some form of
scrutiny, as they are at present under the 1977 Act.
21. Several consultation responses raised the issue
of whether the same Audit Commission team will be appointed to
carry out the audit of the host NHS body and of its associated
NHS charity. This issue is discussed further at paragraph 90 below.
19 Explanatory statement, para 19 Back
20
Explanatory statement, annex A, p 6 Back
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