Appendix A
Letter from the Clerk of the Committee to the
Department of Health
Proposal for the draft Regulatory Reform (National
Health Service Charitable Trusts Accounts and Audit) Order 2004:
request for further information
Thank you for your appearance before the Committee
yesterday, and for the extremely helpful briefing you and your
colleagues from the Charity Commission and the National Assembly
for Wales gave on the proposal.
The Committee considered the proposal at its subsequent
meeting and resolved to seek further information from the Department.
The issues which concern the Committee are set out below, together
with questions arising from them, under the relevant categories
for consideration set out in the Regulatory Reform Act and the
Committee's Standing Order.
Whether the proposal satisfies the conditions
of proportionality between burdens and benefits set out in sections
1 and 3 of the Regulatory Reform Act 2001 (S.O. No. 141(6)(k))
1. The explanatory statement indicates that the proposed
order will place a requirement on NHS charities to assist in the
audit or examination of their accounts. It is not immediately
apparent that this requirement derives from the proposed order.
Q 1 Please indicate where the requirement
on NHS charities to assist the Audit Commission with audits or
examinations is to be found, either in the existing legislation
or in the proposed order.
2. It appears to the Committee that the proposed
order may re-enact two of the burdens in existing legislation:—
(a) New section 43A(5) of the Charities Act 1993
(the 1993 Act), inserted by article 3(3) of the draft order, appears
to re-enact the burden in existing section 43(7)(b) which new
subsection 43(10) (inserted by article 3(2)) disapplies.
(b) New section 43B of the 1993 Act, inserted
by article 3(3) of the draft order, appears to re-enact the existing
provisions of section 98(1) of the National Health Service Act
1977 in respect of the inspection rights of the Comptroller and
Auditor General and the Auditor General for Wales, which article
2(3) of the draft order disapplies.
Q 2 Please indicate whether the Department
considers that the draft order would re-enact the burdens described
in paragraphs 2a) and 2b) above: and, if so, whether it believes
that the re-enacted burdens meet the test of proportionality set
out in section 1(1)(b) of the 2001 Act.
3. It appears to the Committee that, in terms of
the 2001 Act, the proposal would also impose new burdens on the
Audit Commission, which are not explicitly identified in the explanatory
statement (paragraph 39):—
(a) New section 43A of the 1993 Act, inserted
by article 3(3) of the draft order, requires the Audit Commission
to provide an auditor to audit the accounts of NHS charities whose
gross income or total expenditure in any financial year exceeds
£250,000.
(b) In the same section, the Audit Commission
is required to determine whether the accounts of charities whose
income or expenditure does not exceed the £250,000 threshold
require either a full audit or an examination, and to appoint
an Audit Commission auditor or examiner as appropriate.
Q 3 Please indicate whether the Department
considers that the draft order would impose the new burdens described
in paragraphs 3a) and 3b) above: and, if so, whether it believes
that these new burdens meet the test of proportionality set out
in section 1(1)(b) of the 2001 Act.
Whether the proposal has been the subject of,
and taken appropriate account of, adequate consultation (S.O.
No. 141(6)(d))
4. The summary of consultation responses (at Annex
A of the explanatory statement) indicates that a number of respondents
were concerned that guidance on the preparation and submission
of accounts, presently available to NHS charities when they prepare
accounts for submission under section 98 of the 1977 Act, would
no longer be available. In its marginal comments on the consultation
responses, the Department has indicated that the accounting guidance
issued to NHS charities has been based on the Charity Statement
of Recommended Practice (SORP), and that this requirement will
continue.
5. The arrangements envisaged have not been set out
in full in the body of the explanatory statement. It is therefore
difficult to ascertain whether the proposals are likely to result
in an increased administrative or financial outlay for NHS charities.
Q 4 Please indicate whether, under the proposals,
NHS charities will still be able to receive guidance from the
Department of Health on the preparation of their annual accounts;
if not, what forms of guidance will be available to NHS charities;
and whether the Department considers that NHS charities are likely
to incur additional expenditure in the preparation of their accounts
if Department of Health guidance is no longer available.
6. The explanatory statement (paragraph 55) indicates
that a sample of views was sought on the proposed amendment to
the original proposal, which would give the Comptroller and Auditor
General the power to examine the accounts of NHS charities submitted
to the Charity Commission. The response from the sample indicates
that the amendment to the proposal was discussed and approved
at a meeting of the Informal Group of Charities Associated with
NHS Bodies on 20 November 2002.
Q 5 Please indicate how the "Informal
Group of Charities Associated with NHS Bodies" is constituted,
and the bodies which are members of the Group; how often the Group
meets; and whether, in the Department's opinion, the Group is
properly representative of the opinion of NHS charities in England
and in Wales.
Whether the proposal has been the subject of,
and taken appropriate account of, estimates of increases or reductions
in costs or other benefits which may result from its implementation
(S.O. No. 141(6)(m))
7. The Committee has examined the statements made
by the Department in the explanatory statement concerning the
appointment of Audit Commission auditors to audit the accounts
of NHS charities and the appropriate NHS host body. A number
of consultees indicated in their responses that they would like
the auditor appointed to the host body to audit the accounts of
the NHS charity. Against one response (explanatory statement,
annex A, p. 9) the Department has stated that "[Audit Commission]
auditors appointed to the host body are automatically appointed
to the charity. We do not envisage any change in this process."
But against another response requesting joint appointments (annex
A, p. 8) the Department has stated that "we have asked the
Audit Commission to try to ensure that this is the case."
Q 6 Please clarify, in the light of apparently
conflicting observations in the explanatory statement, whether
there will be any change to the existing arrangements whereby
the same Audit Commission auditors are appointed to scrutinise
the accounts both of the host NHS body and of its associated charity.
Other matters arising from the Committee's
consideration (S.O. No. 141(5))
8. The figures for the number of NHS charities in
England and Wales in the financial year 2001/02 appeared to differ
between the explanatory statement and the accompanying regulatory
impact assessment (annex F). It would assist the Committee to
have a definitive statement of the number of NHS charities in
England and Wales as at the end of the most recent financial year
for which figures are available.
Q 7 Please indicate the total number of NHS
charities in England and in Wales, and indicate how many fall
into each category of trusteeship at the end of the last financial
year for which figures are available.
Q 8 Please also indicate how many of those
charities had income or expenditure of less than £10,000;
how many had income or expenditure between £10,000 and £250,000,
and how many had income or expenditure exceeding £250,000,
in respect of the last financial year for which figures are available.
9. The explanatory statement (paragraph 20) gives
an indication of the extent to which the proposals will extend
to the proposed NHS Foundation Trusts. It does not appear to
explain what the relationship will be between an NHS Trust and
its associated NHS charity once the NHS Trust has been designated
a Foundation Trust.
Q 9 Please indicate the extent to which it
is envisaged that the proposals will extend to NHS charities associated
with NHS trusts, once those trusts are designated as foundation
trusts under the Health and Social Care (Community Health and
Standards) Act 2003.
I would be grateful to receive your response to the
above questions, together with any further information the Department
believes would be helpful to the Committee, not later than Friday
6 February.
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