DCH39 Sovereign Management Services Ltd
Sovereign Management
Services Ltd
Francene Graham,
Scrutiny Unit,
Committee Office,
House of Commons,
7 Milibank,
London SWIP 3JA.
Ref: DCB/CF/w 8th
June 2004
Dear Francene,
Re: Draft Charities Bill -
Written Evidence
Please find enclosed a copy
of our submission as to why we feel that Charities will
be adversely affected by the Draft Charities Bill.
We submit that charities with
a turnover in
excess of the £500,000
threshold will
be disadvantaged as the threshold
for non-charitable companies has been increased to around £4
million. This impacts on the auditors themselves who will inevitably
become fewer in number and charge higher fees to cover their costs.
Charities should not be expected to carry this burden.
Additionally, unincorporated charities
have to meet the fairly stringent requirements of the current
SORP 2000 whilst incorporated charities with an income of up to
£90,000 are not subject to any form of external scrutiny.
Incorporated charities with an income of between £90,000
and £250,000 must have a compilation report from a Reporting
Accountant. This scrutiny is not as rigorous as the independent
examination required for an unincorporated charity.
Please find enclosed a copy of our
most recent brochure outlining the services we provide. Daryl
Martin, the Managing Director, is both MACIE and is a qualified
trainer on behalf of ACIE. He would like to be kept informed of
any developments and please don't hesitate to contact either Daryl
or myself should you require any additional information at this
stage.
Yours sincerely,
WIZZY CROUCH
CHARITY FORMATION MANAGER
Sovereign Management
Services Ltd
Draft Charities Bill
Scrutiny of Charity Accounts
As independent examiners of over 500
clients in the charity sector, we have an in-depth knowledge and
understanding of how charities operate. Independent Examiners
Ltd. was set up about 8 years ago in order to provide a service
to charities. In addition to the independent examination of charity
accounts - including
arranging for Reporting Accountants and Audits -
we register new charities and
incorporate existing ones. We can also help with Gift Aid, training,
tax issues, visits etc.
We are concerned that charities WILL
be adversely affected by the proposed new legislation. This is
partly due to the fact that the proposed bill fails to tidy up
the anomaly whereby incorporated charities up to £90,000
are not required to have any form of external scrutiny. Incorporated
charities of turnover between 90k and 250k (500k proposed) must
have a compilation report from a Reporting Accountant. However,
this scrutiny is not as rigorous as the independent examination
required for an unincorporated charity. It is not clear how CIO's
will impact this.
Also, the proposed new audit threshold,
whilst welcomed, will adversely impact charities with turnover
in excess of 500k because the threshold for non-charitable companies
is going up to around 4 million. The increase in the commercial
company threshold means that auditors will have far fewer audits
to prepare which means that many auditors will not renew their
licenses and those that remain will increase their fees substantially.
One of our auditors has already resigned its licence despite us
agreeing a 100% increase in fees.
A
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