Accounting scare prompts rethink at NHS charities

Many are seeking to appoint independent trustees

NHS charities are applying to change their governance structures because they believe it will prevent their accounts being moved to the balance sheets of Government bodies, the Department of Health has said.

In a letter sent to trustees of NHS charities and seen by Third Sector, the department says it has received a large number of requests to appoint independent trustees at NHS charities. Most NHS charities have an NHS trust as sole trustee.

Janet Perry, financial controller of the NHS, warned in October that trusts managing the largest charities might have to include those charities' accounts on their balance sheets or face having their accounts qualified by auditors. The Charity Commission said it would be "wholly inappropriate" for charitable funds to appear on the balance sheets of public bodies.

Thirty-eight of the 282 charities with sole trustees have now said they want to appoint independent trustees instead, which would remove the need to consolidate.

But the Department of Health said that many of these requests have not been thought through.

"The wide range of charities included in these requests indicates that some have not understood the purpose and implications of operating an independent NHS charity," it says.

The letter points out that the department must give permission before NHS charities can change their governance arrangements.

It also says that guidance on requirements for independent charities has been sent to the NHS trusts, foundation trusts and primary care trusts that have made recent requests so that they can reconsider them. If they still wish to proceed, they can submit a business case by early December.

The department would then consider the business cases and decide on requests for independent trustee status, it says.

A spokeswoman for the Charity Commission said it did not believe a change in trusteeship should normally be necessary to prevent consolidation.

"It's the interpretation of the accounting guidance, as being applied by government accountants to charities, that needs to change," she said.

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