Charities Bill [HL]

House of Commons

Session 2005 - 06
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Charities Bill [HL]

Charities Bill [HL]
Schedule 6 — Group Accounts
109

Preservation of group accounts
5     (1)
The charity trustees of a charity shall preserve any group accounts
prepared by them under paragraph 3(2) for at least six years from
the end of the financial year to which the accounts relate.
      (2)
Subsection (4) of section 41 of this Act shall apply in relation to the
5
preservation of any such accounts as it applies in relation to the
preservation of any accounting records (the references to
subsection (3) of that section being construed as references to sub-
paragraph (1) above).
Audit of accounts of larger groups
10
6     (1)
This paragraph applies where group accounts are prepared for a
financial year of a parent charity under paragraph 3(2) and—
(a)
the aggregate gross income of the group in that year
exceeds the relevant income threshold, or
(b)
the aggregate gross income of the group in that year
15
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.
      (2)
In sub-paragraph (1)—
20
(a)
the reference in paragraph (a) or (b) to the relevant income
threshold is a reference to the sum prescribed as the
relevant income threshold for the purposes of that
paragraph, and
(b)
the reference in paragraph (b) to the relevant assets
25
threshold is a reference to the sum prescribed as the
relevant assets threshold for the purposes of that
paragraph.

“Prescribed” means prescribed by regulations made by the
Secretary of State.
30
      (3)
This paragraph also applies where group accounts are prepared
for a financial year of a parent charity under paragraph 3(2) and
the appropriate audit provision applies in relation to the parent
charity’s own accounts for that year.
      (4)
If this paragraph applies in relation to a financial year of a parent
35
charity by virtue of sub-paragraph (1) or (3), the group accounts
for that year shall be audited—
(a)
(subject to paragraph (b) or (c) below) by a person within
section 43(2)(a) or (b) of this Act;
(b)
if section 43A of this Act applies in relation to that year, by
40
a person appointed by the Audit Commission (see section
43A(7));
(c)
if section 43B of this Act applies in relation to that year, by
the Auditor General for Wales.
      (5)
Where it appears to the Commission that sub-paragraph (4)(a)
45
above has not been complied with in relation to that year within
ten months from the end of that year—

Charities Bill [HL]
Schedule 6 — Group Accounts
110

(a)
the Commission may by order require the group accounts
for that year to be audited by a person within section
43(2)(a) or (b) of this Act, and
(b)
if it so orders, the auditor shall be a person appointed by
the Commission.
5
      (6)
Section 43(6) of this Act shall apply in relation to any such audit as
it applies in relation to an audit carried out by an auditor
appointed under section 43(5) (reading the reference to the funds
of the charity as a reference to the funds of the parent charity).
      (7)
Section 43A(4) and (6) of this Act apply in relation to any
10
appointment under sub-paragraph (4)(b) above as they apply in
relation to an appointment under section 43A(2).
      (8)
If this paragraph applies in relation to a financial year of a parent
charity by virtue of sub-paragraph (1), the appropriate audit
provision shall apply in relation to the parent charity’s own
15
accounts for that year (whether or not it would otherwise so
apply).
      (9)
In this paragraph “the appropriate audit provision”, in relation to
a financial year of a parent company, means—
(a)
(subject to paragraph (b) or (c) below) section 43(2) of this
20
Act;
(b)
if section 43A of this Act applies in relation to that year,
section 43A(2);
(c)
if section 43B of this Act applies in relation to that year,
section 43B(2).
25
Examination of accounts of smaller groups
7     (1)
This paragraph applies where—
(a)
group accounts are prepared for a financial year of a parent
charity under paragraph 3(2), and
(b)
paragraph 6 does not apply in relation to that year.
30
      (2)
If—
(a)
this paragraph applies in relation to a financial year of a
parent charity, and
(b)
sub-paragraph (4) or (5) below does not apply in relation
to it,
35

subsections (3) to (7) of section 43 of this Act shall apply in relation
to the group accounts for that year as they apply in relation to the
accounts of a charity for a financial year in relation to which
subsection (2) of that section does not apply, but subject to the
modifications in sub-paragraph (3) below.
40
      (3)
The modifications are—
(a)
any reference to the charity trustees of the charity is to be
construed as a reference to the charity trustees of the
parent charity;
(b)
any reference to the charity’s gross income in the financial
45
year in question is to be construed as a reference to the
aggregate gross income of the group in that year; and

Charities Bill [HL]
Schedule 6 — Group Accounts
111

(c)
any reference to the funds of the charity is to be construed
as a reference to the funds of the parent charity.
      (4)
If—
(a)
this paragraph applies in relation to a financial year of a
parent charity, and
5
(b)
section 43A of this Act also applies in relation to that year,

subsections (3) to (6) of that section shall apply in relation to the
group accounts for that year as they apply in relation to the
accounts of a charity for a financial year in relation to which
subsection (2) of that section does not apply.
10
      (5)
If—
(a)
this paragraph applies in relation to a financial year of a
parent charity, and
(b)
section 43B of this Act also applies in relation to that year,

subsection (3) of that section shall apply in relation to the group
15
accounts for that year as they apply in relation to the accounts of a
charity for a financial year in relation to which subsection (2) of
that section does not apply.
      (6)
If the group accounts for a financial year of a parent charity are to
be examined or audited in accordance with section 43(3) of this
20
Act (as applied by sub-paragraph (2) above), section 43(3) shall
apply in relation to the parent charity’s own accounts for that year
(whether or not it would otherwise so apply).
      (7)
Nothing in sub-paragraph (4) or (5) above affects the operation of
section 43A(3) to (6) or (as the case may be) section 43B(3) in
25
relation to the parent charity’s own accounts for the financial year
in question.
Supplementary provisions relating to audits etc.
8     (1)
Section 44(1) of this Act shall apply in relation to audits and
examinations carried out under or by virtue of paragraph 6 or 7,
30
but subject to the modifications in sub-paragraph (2) below.
      (2)
The modifications are—
(a)
in paragraph (b), the reference to section 43, 43A or 43B of
this Act is to be construed as a reference to paragraph 6
above or to any of those sections as applied by paragraph
35
7 above;
(b)
also in paragraph (b), the reference to any such statement
of accounts as is mentioned in sub-paragraph (i) of that
paragraph is to be construed as a reference to group
accounts prepared for a financial year under paragraph
40
3(2) above;
(c)
in paragraph (c), any reference to section 43, 43A or 43B of
this Act is to be construed as a reference to that section as
applied by paragraph 7 above;
(d)
in paragraphs (d) and (e), any reference to the charity
45
concerned or a charity is to be construed as a reference to
any member of the group; and

Charities Bill [HL]
Schedule 6 — Group Accounts
112

(e)
in paragraph (f), the reference to the requirements of
section 43(2) or (3) of this Act is to be construed as a
reference to the requirements of paragraph 6(4)(a) or those
applied by paragraph 7(2) above.
      (3)
Without prejudice to the generality of section 44(1)(e), as modified
5
by sub-paragraph (2)(d) above, regulations made under that
provision may make provision corresponding or similar to any
provision made by section 389A of the Companies Act 1985 (c. 6)
in connection with the rights exercisable by an auditor of a
company in relation to a subsidiary undertaking of the company.
10
      (4)
In section 44(2) of this Act the reference to section 44(1)(d) or (e)
includes a reference to that provision as it applies in accordance
with this paragraph.
Duty of auditors etc. to report matters to Commission
9     (1)
Section 44A(2) to (5) and (7) of this Act shall apply in relation to a
15
person appointed to audit, or report on, any group accounts under
or by virtue of paragraph 6 or 7 above as they apply in relation to
a person such as is mentioned in section 44A(1).
      (2)
In section 44A(2)(a), as it applies in accordance with sub-
paragraph (1) above, the reference to the charity or any connected
20
institution or body is to be construed as a reference to the parent
charity or any of its subsidiary undertakings.
Annual reports
10    (1)
This paragraph applies where group accounts are prepared for a
financial year of a parent charity under paragraph 3(2).
25
      (2)
The annual report prepared by the charity trustees of the parent
charity in respect of that year under section 45 of this Act shall
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 Secretary of
State.
      (3)
Without prejudice to the generality of sub-paragraph (2),
35
regulations under that sub-paragraph may make provision—
(a)
for any such report as is mentioned in paragraph (a) of that
sub-paragraph 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
40
requirement prescribed by virtue of sub-paragraph (2)(b)
in the case of a particular subsidiary undertaking or a
particular class of subsidiary undertaking.
      (4)
Section 45(3) to (3B) shall apply in relation to the annual report
referred to in sub-paragraph (2) above as if any reference to the
45

Charities Bill [HL]
Schedule 6 — Group Accounts
113

charity’s gross income in the financial year in question were a
reference to the aggregate gross income of the group in that year.
      (5)
When transmitted to the Commission in accordance with sub-
paragraph (4) above, the copy of the annual report shall have
attached to it both a copy of the group accounts prepared for that
5
year under paragraph 3(2) and—
(a)
a copy of the report made by the auditor on those accounts;
or
(b)
where those accounts have been examined under section
43, 43A or 43B of this Act (as applied by paragraph 7
10
above), a copy of the report made by the person carrying
out the examination.
      (6)
The requirements in this paragraph are in addition to those in
section 45 of this Act.
Excepted charities
15
11    (1)
This paragraph applies where—
(a)
a charity is required to prepare an annual report in respect
of a financial year by virtue of section 46(5) of this Act,
(b)
the charity is a parent charity at the end of the year, and
(c)
group accounts are prepared for that year under
20
paragraph 3(2) by the charity trustees of the charity.
      (2)
When transmitted to the Commission in accordance with section
46(7) of this Act, the copy of the annual report shall have attached
to it both a copy of the group accounts and—
(a)
a copy of the report made by the auditor on those accounts;
25
or
(b)
where those accounts have been examined under section
43, 43A or 43B of this Act (as applied by paragraph 7
above), a copy of the report made by the person carrying
out the examination.
30
      (3)
The requirement in sub-paragraph (2) is in addition to that in
section 46(6) of this Act.
Exempt charities
12
Nothing in the preceding provisions of this Schedule applies to an
exempt charity.
35
Public inspection of annual reports etc.
13
In section 47(2) of this Act, the reference to a charity’s most recent
accounts includes, in relation to a charity whose charity trustees
have prepared any group accounts under paragraph 3(2), the
group accounts most recently prepared by them.
40

Charities Bill [HL]
Schedule 7 — Charitable incorporated organisations
Part 1 — New Part 8A of and Schedule 5B to 1993 Act
114

Offences
14    (1)
Section 49(1) of this Act applies in relation to a requirement within
sub-paragraph (2) as it applies in relation to a requirement within
section 49(1)(a).
      (2)
A requirement is within this sub-paragraph where it is imposed
5
by section 45(3) or (3A) of this Act, taken with—
(a)
section 45(3B), (4) and (5), and
(b)
paragraph 10(5) or 11(2) above,

as applicable.
      (3)
In sub-paragraph (2) any reference to section 45(3), (3A) or (3B) of
10
this Act is a reference to that provision as applied by paragraph
10(4) above.
      (4)
In section 49(1)(b) the reference to section 47(2) of this Act includes
a reference to that provision as extended by paragraph 13 above.
Aggregate gross income
15
15
The Secretary of State may by regulations make provision for
determining for the purposes of this Schedule the amount of the
aggregate gross income for a financial year of a group consisting
of a parent charity and its subsidiary undertaking or
undertakings.”
20
Schedule 7
Section 34

Charitable incorporated organisations
Part 1
New Part 8A of and Schedule 5B to 1993 Act
1
After Part 8 of the 1993 Act insert the following new Part—
25
“Part 8A
Charitable incorporated organisations
Nature and constitution
69A
Charitable incorporated organisations
(1)
In this Act, a charitable incorporated organisation is referred to as a
30
“CIO”.
(2)
A CIO shall be a body corporate.
(3)
A CIO shall have a constitution.
(4)
A CIO shall have a principal office, which shall be in England or in
Wales.
35

Charities Bill [HL]
Schedule 7 — Charitable incorporated organisations
Part 1 — New Part 8A of and Schedule 5B to 1993 Act
115

(5)
A CIO shall have one or more members.
(6)
The members may be either—
(a)
not liable to contribute to the assets of the CIO if it is wound
up, or
(b)
liable to do so up to a maximum amount each.
5
69B
Constitution
(1)
A CIO’s constitution shall state—
(a)
its name,
(b)
its purposes,
(c)
whether its principal office is in England or in Wales, and
10
(d)
whether or not its members are liable to contribute to its
assets if it is wound up, and (if they are) up to what amount.
(2)
A CIO’s constitution shall make provision—
(a)
about who is eligible for membership, and how a person
becomes a member,
15
(b)
about the appointment of one or more persons who are to be
charity trustees of the CIO, and about any conditions of
eligibility for appointment, and
(c)
containing directions about the application of property of the
CIO on its dissolution.
20
(3)
A CIO’s constitution shall also provide for such other matters, and
comply with such requirements, as are specified in regulations made
by the Secretary of State.
(4)
A CIO’s constitution—
(a)
shall be in English if its principal office is in England,
25
(b)
may be in English or in Welsh if its principal office is in
Wales.
(5)
A CIO’s constitution shall be in the form specified in regulations
made by the Commission, or as near to that form as the
circumstances admit.
30
(6)
Subject to anything in a CIO’s constitution: a charity trustee of the
CIO may, but need not, be a member of it; a member of the CIO may,
but need not, be one of its charity trustees; and those who are
members of the CIO and those who are its charity trustees may, but
need not, be identical.
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69C
Name and status
(1)
The name of a CIO shall appear in legible characters—
(a)
in all business letters of the CIO,
(b)
in all its notices and other official publications,
(c)
in all bills of exchange, promissory notes, endorsements,
40
cheques and orders for money or goods purporting to be
signed on behalf of the CIO,
(d)
in all conveyances purporting to be executed by the CIO, and
(e)
in all bills rendered by it and in all its invoices, receipts, and
letters of credit.
45