Joint Committee on the Draft Charities Bill Written Evidence


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.

















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