DCH 354 Association of Charity Independent
Examiners
Bentley Resource Centre, High Street,
Bentley, Doncaster DN5 0AA
Tel: 01302 828338 Fax: 01302 872973
Website: www.acie.org.uk E-mail: director@acie.org.uk
Registered charity no 1077154
ADDITIONAL NOTE
SUBMITTED BY
THE ASSOCIATION OF CHARITY INDEPENDENT
EXAMINERS
TO THE JOINT COMMITTEE ON THE DRAFT
CHARITIES BILL
10 August 2004
1 INTRODUCTION
This note seeks to provide additional
information for the Committee on the qualifications offered by
the Association of Charity Independent Examiners (ACIE).
It is not making any new points but
seeks to clarify some of the points made in our evidence
submitted on 17 June (DCH 94), in the light of the Home Office's
Schedule of Points on issues raised in written evidence to the
Committee.
2 INDEPENDENT EXAMINATION OF CHARITY
ACCOUNTS
Clause 22(5) - Qualifications of
Persons to act as independent examiners for charities with incomes
between £250K and £500K
2.1 On the evidence submitted regarding
inclusion of other professional bodies in the list, the Home Office
Schedule of Responses (page 15) says:
This issue revolves around whether
these bodies can demonstrate the usual criteria for assessing
eligibility of professional bodies: membership criteria, training,
regulatory supervision etc.
The Association of Charity Independent
Examiners has made a valuable contribution to the sector and the
Home Office has sympathy for their wish to be included, though
this may not be easy with the application of the above criteria.
2.2 ACIE fully accepts the principle
of this argument, and appreciates the Home Office's recognition
of our contribution to the sector.
2.3 The comment implies that if ACIE
can demonstrate the three key issues of:
- membership criteria
- training
- regulatory supervision
that the Home Office would be sympathetic
to including ACIE in the list of qualifications.
2.4 The ACIE Council welcomes this,
and believes that ACIE can demonstrate these criteria,
in relation to our Full Members admitted with Domains of competence
to cover any charity up to the legal limit for independent examination.
However we recognise the difficulty
of referring only to those specific members in legislation. The
ACIE Council is therefore proposing to recommend the creation
of a new term of Fellow to refer only to those:
(a) who have met the ACIE criteria
for admission as a Full Member (see Appendix I and II below, which
have already been submitted, but which are included for completeness)
and
(b) who, in addition, have demonstrated
to Council that both their knowledge and competence is at the
appropriately high level for them to be authorised to act as an
Independent Examiner for any charity up to the legal limit for
independent examination of their accounts.
The Council anticipates putting this
proposal to members in a constitutional ballot in the early autumn,
the results of which will take effect in October 2004 - well before
the full Charities Bill is presented to Parliament.
2.5 ACIE will then have three levels
of members:
(a) Associate Members - not
professional qualified but seeking ACIE's support and training
and working towards the professional grades;
(b) Ordinary Full Members -
(MACIE) admitted as professional members but only authorised to
act as independent examiners for a limited range of charities
- in most cases for charities up to a maximum of £100K income
(c) Fellows - (FACIE) admitted
as professional members and authorised to act as independent examiners
for any charity up to the legal limit for independent examination
- i.e. up to £500K income when the Bill is passed (£250K
at present).
The ACIE Council is only
proposing the inclusion of its Fellows in clause 22(5)
of the Bill - not the other membership grades.
2.6 ACIE believes that the criteria
for admission to this level and its disciplinary procedures (see
Appendixes I, II and III) fully meet the three requirements of
membership criteria, training, regulatory supervision.
Much of ACIE's work is modelled on
the procedures of larger and more established professional bodies.
The ACIE Council (trustees) almost all hold chartered professional
qualifications from other bodies, and include some very senior
charity accountants with involvement in the SORP Committee and
regulatory issues in other bodies etc.
Moreover, we note that the Scrutiny
Committee has received a number of submissions from chartered
accountants and others who feel that although they could act as
independent examiners to larger charities by virtue of their existing
accountancy qualifications, they feel that ACIE's charity-specific
professional qualification is much more relevant in this case.
2.7 If, notwithstanding these comments,
and ACIE's very stringent criteria already in force - if the Committee
still feels ACIE needs to do more to meet Government requirements
in terms of its membership criteria or regulatory arrangements,
we would ask the Committee or Home Office to be specific about
what else they would want the Association to do.
3. CHARITIES AFFECTED
3.1 Latest Charity Commission figures
(June 2004) show 7580 registered charities with incomes between
£250K and £1M income, and there will also be some excepted
charities in this band. It is difficult to know how many of these
charities are below £500K, and some of those would be excluded
from independent examination for other reasons too, but it seems
that at most 5000 charities are directly affected by this issue
of the qualifications in clause 22(5).
3.2 However, there is also a huge practical
argument that if the Government wishes to encourage people to
come forward as independent examiners (at all levels) they are
unlikely to join a body like ACIE and get the support they need
if, even after training and admission and eventually reaching
ACIE's highest level (FACIE) they were denied access to acting
as independent examiners for charities between £250K and
£500K.
4. POSSIBLE WORDING
Assuming the Committee is happy that
Fellows of ACIE will meet the criteria for inclusion, we would
suggest the following amended wording for clause 22(5);
(5) After subsection (3) insert
-
"(3A) If subsection (3) above
applies to the accounts of a charity for a year and the charity's
gross income in that year exceeds £250,000, a person qualifies
as an independent examiner for the purposes of paragraph (a) of
that subsection if (and only if) he is an independent person who
is reasonably believed by the charity trustees to have relevant
experience of charity accounts and who is:
(a) a member of a body for
the time being specified in section 249D(3) of the Companies Act
1985 (reporting accountants);
(b) a member of the Chartered
Institute of Public Finance and Accountancy; or
(c) a fellow of the Association
of Charity Independent Examiners.."
APPENDIX I
Summary of the Criteria
and Processes used by
the Council of the Association
of Charity Independent Examiners
to admit someone as a Full
Member
A. Criteria
To become a Full Member an applicant
must demonstrate substantial knowledge and experience of charity
accounting, appropriate to the Domain of Competence for which
he/she wishes to act (see below). Essentially the Membership
Committee is looking for a range of evidence including:
- experience of accounting in general
- experience of charities/voluntary
sector organisations
- understanding of the process of
scrutinising accounts
- understanding of the legal framework
for charity accounting and independent examinations
- practical experience of preparing
and/or examining charity accounts
- whether the individual is a fit
and proper person for the duties to be undertaken.
ACIE's regulations for Full Membership
(see Appendix II) are linked to the legal requirements in the
1993 Act. They state:
"3.1 No person may be admitted
as a Full Member unless he or she has satisfied the Council that
he/she:
(1) is "fit and proper"
to be appointed as a Charity Independent Examiner; and
(2) has the requisite ability and
the practical experience to carry out competent Independent Examinations
of any charity within his/her agreed Domain of Competence..."
The latter phrase is linked directly
to the definition of an independent examiner in s43 of the Charities
Act 1993.
The Domain of Competence is
key to the process. Some Full Members are admitted purely with
a Domain of Competence allowing them to act only for small charities.
We are not suggesting that these members would be included
in the legislation.
However, many Full Members are admitted
with a Domain of Competence allowing them to act for "Any
charity in England and Wales up to the legal limit for independent
examination". To be admitted on this basis, the applicant
has, in effect, to demonstrate a level of charity accounting knowledge
equivalent to a chartered accountant specialising in charities.
B. Process
The steps for someone seeking to become
an ACIE Full Member (MACIE) are as follows.
1. If not already enrolled, the person
must first become an Associate Member of ACIE in order to ensure
commitment to ACIE's Code of Ethics etc.
2. Before applying for Full Membership,
the person must have appropriate evidence of experience in charity
accounting to submit with their application: as a minimum they
must have at least two sets of charity Annual Reports and Accounts
to submit which they have personally prepared and/or independently
examined. (In the case of someone seeking admission with a Domain
to cover "Any charity in England and Wales up to the legal
limit for independent examination", the Committee would normally
expect the experience profile to include much more than two cases.)
3. The person submits an application
for Full Membership: this involves completing a six page form
together with evidence of charity accounts they have prepared,
details of referees and other qualifications. Four copies of
everything are needed.
4. The two references are taken up.
5. The application form and sample
accounts provided are circulated to the members of the ACIE Membership
Committee well before the relevant meeting. In recent years,
this Committee has comprised three very experienced independent
examiners; two of the three are chartered accountants. They scrutinise
the applications in great detail, both in terms of the applicants'
profile and particularly in terms of the sample accounts submitted
which are checked in detail for proper understanding of the Charities
SORP. Any questionable cases, such as where someone is acting
as an independent examiner but may not be wholly independent of
the charity are also flagged up.
6. The ACIE Membership Committee then
meets for at least 1?
hours prior to each Council meeting to discuss the applications
in detail (including the comments of referees). Recommendations
are then made as to whether each application should be accepted,
rejected, or whether further information should be sought.
Less than 50% of applications are
accepted at the first Membership Committee when they are considered.
Very weak cases are recommended for rejection, but where the
Committee feels the person may have the potential but the example
accounts are not of the expected standard, the application is
generally referred back to the applicant, requesting further examples
of charity accounts which the applicant has dealt with.
7. The recommendations of the Membership
Committee are then taken to the Council (trustees) of ACIE for
a final decision. In borderline cases, there can be considerable
further discussion by the Full Council.
8. Once the Council has agreed a decision,
the member is advised. If successful, the Certificate of Full
Membership issued. The person is now a Full Member and entitled
to use the designatory letters MACIE but must only act
as an Independent Examiner to charities falling within his/her
Domain of Competence.
It is thus an extremely thorough process,
modelled extensively on the procedures on long-established professional
bodies, and overseen by a Council the majority of whom are chartered
professionals in other capacities. (The current ACIE Council
includes a two chartered accountants (FCA), a Scottish chartered
accountant (CA), a chartered certified accountant (ACCA), two
chartered bankers (ACIB), an accounting technician (MAAT), and
a charity-specialist solicitor. In total, nine of the ten Council
members hold chartered qualifications from other professional
bodies. The tenth person is a qualified accounting technician,
who would in any case be authorised to act as independent examiner
to charities over in the £250,000 to £500,000 range
by virtue of the proposed paragraph s43(3A)(a) to be added to
the 1993 Act.)
The elapsed timescale from application
to admission is a minimum of two months, but when the Membership
Committee calls for further accounts it is not unusual for the
process to take a year or more.
To date around 60% of applications
for ACIE Full Membership have been successful. Even a number
of applicants from chartered accountants have been unsuccessful
where they have not demonstrated a proper understanding and application
of charity law and the Charities SORP.
APPENDIX II
Association of Charity Independent
Examiners
REGULATIONS FOR FULL MEMBERSHIP
1 The Regulations
1.1 These Regulations were made by
the Council under Clauses F(3) and X(2) of the Constitution.
They came into force on 13 September 1999.
2 Definitions
2.1 Words and expressions defined in
the Constitution shall have the same meanings in these Regulations.
3 Criteria for Full Membership
3.1 No person may be admitted as a
Full Member unless he or she has satisfied the Council that he/she:
(1) is "fit and proper"
to be appointed as a Charity Independent Examiner; and
(2) has the requisite ability and
the practical experience to carry out competent Independent Examinations
of any charity within his/her agreed Domain of Competence (as
described in section 4 below).
4 Domain of Competence as a Charity
Independent Examiner
4.1 A Full Member's agreed "Domain
of Competence as a Charity Independent Examiner":
(1) shall denote:
(a) the type and size of the charities
for which he/she may seek appointment as Independent Examiner;
and
(b) the countries in the United Kingdom
in which he/she may seek such appointments; and
(2) shall be stated:
(a) on the member's certificate of
Full Membership; and
(b) in the Directory of Full Members.
5 Application for Full Membership
5.1 All applications for Full Membership
shall be made in writing on the "Application for Full Membership"
form, the content of which shall be determined by the Council.
5.2 A person applying for Full Membership:
(1) shall already be an Associate
Member:
(2) shall complete and sign the "Application
for Full Membership" form, giving such confirmations and
undertakings as may be requested thereon;
(3) shall pay such subscription and
admission fee as may be published by the Association at the time;
(4) shall state his/her proposed Domain
of Competence as a Charity Independent Examiner; and
(5) shall supply:
(a) the documentation and information
requested on the "Application for Full Membership" form;
and
(b) any documentation and information
requested by the General Secretary or by any member of the Council
or Membership Committee.
6 Full Membership: Admission/refusal
6.1 For each application for Full Membership,
the Council:
(1) shall make one or other of the
following three decisions:
(a) to admit the applicant as a Full
Member on the basis of his/her proposed Domain of Competence as
a Charity Independent Examiner:
(b) to admit the applicant as a Full
Member on the basis of a Domain of Competence as a Charity Independent
Examiner that is more restricted than he/she proposed;
(c) to refuse to admit the applicant
as a Full Member; and
(2) shall notify the applicant in
writing of its decision.
6.2 The Council shall explain to the
applicant its reasons for making any decision other than to admit
him/her as a Full Member on the basis of his/her proposed Domain
of Competence as a Charity Independent Examiner.
7 Certificate of Full Membership
7.1 Each Full Member shall be issued
with a certificate:
(1) on being admitted to Full Membership:
and
(2) if the Council decides to change
his/her proposed Domain of Competence as a Charity Independent
Examiner
7.2 Unless the Council decides otherwise,
a person shall return to the Association his/her certificate of
Full Membership:
(1) if he/she ceases for any reason
to be a Full Member; or
(2) if he/she applies for a change
in his/her agreed Domain of Competence as a Charity Independent
Examiner.
8 Change in agreed Domain of Competence
as a Charity Independent Examiner
8.1 All applications by a Full Member
to extend or restrict his/her agreed Domain of Competence as a
Charity Independent Examiner for Full Membership shall be made
in writing on the "Application for a change in a Full Member's
agreed Domain of Competence as a Charity Independent Examiner"
form, the content of which shall be determined by the Council.
8.2 A Full Member applying to extend
or restrict his/her agreed Domain of Competence as a Charity Independent
Examiner:
(1) shall complete and sign the "Application
for a change in a Full Member's agreed Domain of Competence as
a Charity Independent Examiner" form, giving such confirmations
and undertakings as may be requested thereon;
(2) shall state his/her proposed new
Domain of Competence as a Charity Independent Examiner and the
reasons for the proposed change; and
(3) shall supply:
(a) the documentation and information
requested on the "Application for a change in a Full Member's
agreed Domain of Competence as a Charity Independent Examiner"
form; and
(b) any documentation and information
requested by the General Secretary or by any member of the Council
or Membership Committee.
9 Resignation of Full Membership
9.1 A Full Member may tender his/her
resignation at any time by sending written notice to the Association,
and on its acceptance by the Council, but not until then, he/she
shall cease to be a Full Member.
10 Directory of Full Members
10.1 The Council shall maintain a Directory
of Full Members, an up-to-date copy of which shall be made available
to any person (whether a member or a non-member) on request.
11 Membership Committee
11.1 The Membership Committee shall
be responsible:
(1) for the scrutiny of:
(a) applications for Full Membership;
and
(b) applications for a change in
a Full Member's agreed Domain of Competence as a Charity Independent
Examiner;
(c) notices of resignation from Full
Members; and
(2) in each case, for bringing a recommendation
to the Council for a final decision.
APPENDIX III
Association of Charity Independent
Examiners
DISCIPLINARY PROCEDURES
A concern about a member's conduct
can be raised by other members of the Association, by a charity
for which the member if acting, or can arise through the Association's
own procedures, such as reviewing applications
for Full Membership in terms of the sample accounts submitted
and references received. Sometimes members may raise matters
about themselves in correspondence with the Association.
In the event of any concern arising about a member's conduct,
especially if it appears he/she may have broken the ACIE Code
of Ethics, the first step is usually for the General Secretary/Director
to contact the member
concerned for clarification. If the matter was a one-off
inadvertent breach, and if the member gives assurances that it
will not be repeated, then usually no further action is taken.
If the issue appears more serious it is referred to the Membership
Committee for investigation, which then reports to the Council
on the proposed action. In many cases, the Council will
seek written assurances
from the member regarding his/her practise, but if such assurances
are not forthcoming, the Council will exercise its powers under
clause E(5) of the Constitution to exclude the person from membership
(or the Council may exercise the lesser sanction of downgrading
a Full Member to an Associate Member)... In either of these
cases, the member has a right of final appeal to the Council in
person.
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