Accounting changes 'damage accountability'

A Government decision to loosen accounting procedures for charities has been criticised by one of the country's leading charity accountants.

Nick Brooks, head of not-for-profit at accountants Kingston Smith and chair of the charities technical group at the Institute of Chartered Accountants in England and Wales, said accountability and transparency in the sector had been damaged by the decision of the Office of the Third Sector to let the Charity Commission raise accounting thresholds.

Charities with incomes of less than £250,000 now do not have to prepare accruals accounts, and charities with incomes under £25,000 do not have to file accounts with the commission.

Most respondents to an OTS consultation said they backed the higher limits. However, Brooks said consulting small charities on whether they wanted less stringent regulation was "like asking turkeys to consult on Christmas".

He said: "This is about what's happening to donors' money - my money and yours. Public money should be properly accounted for. Receipts and payments accounts do not necessarily show a true and fair view of a charity's affairs.

"In the case of a higher threshold to file with the regulator, this helps only the regulator, not charities or the public. Charities still have to prepare accounts in the same way; they just don't have to file them."

The decision to raise thresholds has been also opposed by umbrella bodies such as Navca and the NCVO.

But Keith Hickey, chief executive of the Charity Finance Directors' Group, said he supported the plans. "We consulted our members," he said. "The majority were in favour of the proposals. So this seems to fit with what charity finance directors want."


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