New regulation requirements for charities has underlined the importance of hiring trusted business consultancy services to keep charities performing as compliantly as possible.
On 23rd October 2014, the Charity Commission, an independent regulator of charities in England and Wales, announced changes to the annual return process, which is intended to ensure that the public can give money to charities in confidence. Regulators reported that new questions to be added to the annual return will improve its ability to identify those charities in risk of financial failure, thereby making them more accountable to the public that supports them.
Taking these concerns into account, the next annual return will ask:
- How much income was received from governments to provide services?
- How much income was received from government grants?
- What is your policy on staff payment?
- Has the charity renewed financial controls during the period of reporting?
An additional question concerning charities’ campaigning expenditures was shelved for 2015. The Charity Commission has argued that a change at this point would cause unnecessary additional work, but assert that the campaign expenditure is relevant for public interest, and this question is expected to be included on annual returns for 2016.
Also rejected were plans to require charities bringing in between £10,000 and £500,000 to submit key financial information. It was ultimately decided that such a move may impede small charities from growing into larger entities, so the Charity Commission is seeking to explore other solutions, such as the mandatory introduction of accounting software, in order to regulate these charities fairly without placing them under undue strain.
The Charity Commission’s Chief Executive, Paula Sussex explained: “The public rightly expects charities to be accountable and transparent. They also expect us to regulate effectively and to use the tools at our disposal to do so. This additional information will help achieve both aims.”
Increased public scrutiny and additional regulation, with the promise of more to come next year, will naturally place more responsibility on charity accounting teams. London Registrars’ business consultancy services can help charities to adapt to these changes and complete their annual returns quickly and efficiently. Contact us today for further information.