Memorandum from Cardiff Further Education
Trust (DCH 112)
1. I write with regard to Clause 22(2)(1)
of the draft Charities Bill which I understand is currently being
considered by a Joint Committee of both Houses of Parliament.
2. I am the Treasurer of the Cardiff Further
Education Trust (Registered Charity No 525512). Should the Charities
Bill proceed in its current form, the Trust, and other charities
like it, will incur extra costs as a result of having to have
their annual accounts fully audited instead of merely independently
examined.
3. Under existing legislation, a charity's
accounts must be fully audited if its income or expenditure exceeds
£250,000. The proposed Clause 22(2)(1) will require the accounts
to be fully audited if either:
(a) Income exceeds £500,000, or
(b) Income exceeds £100,000 and the
aggregate value of the charity's assets exceeds £2,800,000.
These audit requirements apply to the financial
year in which the limit is exceeded plus the following two financial
years.
4. The assets of the Cardiff Further Education
Trust total around £20.4 million. About £17.4 million
of these are land and property that is held for purely charitable
purposes. The Trust's governing instrument specifies the purpose
for which these assets must be held and the Trust receives no
income from them. The remaining £3 million consists of investments
that generate income of around £130,000 a year most of which
is used to fund student grants. These investments tend not to
be traded very often.
5. Currently, the Trust must have its accounts
independently examined and is charged £150 a year to have
this done. Under the proposed new legislation, because the Trust's
assets exceed £2.8 million, its accounts would need to be
fully audited. During the year ended 31 March 1997, the Trust's
expenditure exceeded £250,000 and as a result a full audit
of its accounts was required for this and the following two years.
This cost the Trust £595 a year, an amount that, due to inflation,
I would anticipate would now have risen to around £700 a
year. Thus, the Charities Bill, as it stands, would increase the
Trust's costs by around £550 a year.
6. The proposed tightening up of scrutiny
requirements relating to charity accounts would be understandable
if it addressed a real financial risk. This might be the case
if assets of significant value were disposed of during the year.
The Charity Commission would then want assurance that disposals
were for a fair price and the resultant income was properly accounted
for and used. Where no such disposal takes place I see no justification
for the proposed enhanced level of scrutiny.
7. Even when a significant disposal does
take place, if this is carried out under the supervision of the
Charity Commission, I see no need for additional scrutiny. Such
a disposal was carried out by the Cardiff Further Education Trust
in 1999 when the Coleg Glan Hafren Further Education Trust Fund
(Registered Charity No 1077317) was established to acquire and
to run for charitable purposes one of the buildings then owned
by the Cardiff Further Education Trust Fund.
8. I would therefore like to see the draft
Charities Bill amended so that Clause 22(2)(1)(b) would apply
only if assets valued at above a reasonable threshold were disposed
of during the relevant period and this disposal took place without
supervision by the Charity Commission.
Rick Zaple
June 2004
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