DCH 112 Cardiff Council
SUBMISSION ON BEHALF OF CARDIFF FURTHER
EDUCATION TRUST TO THE PARLIAMENTARY JOINT COMMITTEE EXAMINING
THE DRAFT CHARITIES BILL
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 £20.4M. About £17.4M
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 £3.0M 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 £2.8M, 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
Hon. Treasurer
Cardiff Further Education Trust
Room 348
County Hall
Atlantic Wharf
Cardiff
CF10 4UW
Telephone: 029 2087 2324
Email: r.zaple@cardiff.gov.uk
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