Your evidence and views on the thresholds relating to accounting and reporting are invited, as CFG prepares to respond to the consultation.
The Law commission’s 2017 report ‘Technical Issues in Charity Law’ recommended that the government should periodically review all financial thresholds in the 2011 Charities Act to consider increasing them inline with inflation.
In keeping with this recommendation, DCMS is consulting on increasing 21 charity financial thresholds, those from the 2011 Act and also those relating to professional fundraising from the 1992 Charities Act. The consultation will run until 12 June.
For each threshold DCMS has proposed three different options. Either keeping at its current level, raising it in line with CPIH inflation (often rounding to the nearest round number), or partially increasing by c. 20% from its baseline.
In responding to the consultation, CFG will prioritise the thresholds that relate to reporting and accounting. In particular:
- The gross annual income threshold over which charity accounts must be examined by an independent examiner
- The gross annual income threshold over which a non-company charity must prepare accruals accounts instead of receipts and payments accounts
- The gross annual income threshold under which a charity may prepare receipts and payments accounts instead of accruals accounts
- The gross annual income threshold over which a full audit is required.
- The value of assets over which account auditing requirements apply where gross annual income is less than £1m.
- The gross aggregate income of a charity group over which the requirement to prepare group accounts applies.
- The gross aggregate income of a charity group over which audit requirements apply.
In each instance we are minded to propose that DCMS increases the thresholds in line with CPIH inflation (Option 2) as inflationary increases mean that more small organisations are caught by additional layers of regulation where they were not captured previously.
We also encourage charities to submit their own response to the consultation, if it is of interest.
We are keen to consult with members to garner their views and consider how we might offer reassurance to DCMS that increasing these thresholds would not undermine accountability and trust in the sector. With this mind, we will shortly be sending a survey to all charities inviting them to share their views.
If you have any thoughts on the above, please email the Policy Team.