§ Mr. StunellTo ask the Secretary of State for the Home Department (1) what he calculates to be the threshold level of turnover of charities needed to trigger full annual audits if the current provision had been indexed in line with that applied to company audits since its introduction; [2786]
(2) what plans he has to uprate the threshold level of annual turnover for charities triggering full annual audits. [2785]
§ Angela EagleThere are no plans at present to uprate the threshold level triggering full annual audits for charity accounts although the matter is kept under review.
538WPart VI of the Charities Act 1993 and the associated Regulations and Statements of Recommended Practice provide the accounting framework for charities. The accounting requirements are graduated and vary with the size of the charity. Charities with gross income or total expenditure of over £250,000 (in the current or two previous financial years) are required to produce audited accounts.
Charities that are registered as companies are subject to the Companies Acts and must file their accounts with Companies House. They are also subject to charity law. The audit threshold for a charitable company is £250,000 gross income, as provided for in the Companies Act 1985 (Audit Exemption) (Amendment) Regulations 1997.
The auditing threshold for non-charitable companies was raised last year from £350,000 to £1 million, an increase of approximately 280 per cent., but the decision was taken at that time to retain the existing threshold for charitable companies. A similar increase for charities would raise the threshold to the order of £700,000.
Good charity accounts which show how the charity is using its resources and which are reliable, consistent and available to the public are important in demonstrating openness and public accountability. The particular public interest in charities and charitable companies calls for an accounting system for them which is different from that which is appropriate for non-charitable organisations.