Charities call for dialogue after controversial audit proposals do not appear in Queen’s Speech

Proposed changes to the accounting regime would make major charity leaders personally responsible for book-keeping errors

Prince Charles delivering the Queen's Speech (Photograph: Alastair Grant/Pool/AFP via Getty Images)
Prince Charles delivering the Queen's Speech (Photograph: Alastair Grant/Pool/AFP via Getty Images)

Charity experts have called for the government to reopen discussions with the voluntary sector after plans for financial reform were apparently dropped from the Queen’s Speech.

The government had been expected to announce plans to change auditing rules, but the legislation was not included in the speech today.

The proposed changes would have introduced new regulations for charities with an annual income of £100m or more. 

These charities would have been treated as public interest entities under the new rules, and senior staff would have been personally liable for errors in the accuracy of financial reporting, and could have faced bans or fines.

The proposals were based on the white paper Restoring Trust in Audit and Corporate Governance,  produced by the Department for Business, Energy and Industrial Strategy, which pledged to tackle financial mismanagement and fraud at large corporations.

The suggested reforms had been heavily criticised by large charities and the Charity Finance Group. 

Voluntary organisations including Oxfam, Citizens Advice and the British Heart Foundation signed an open letter organised by the CFG last year, which said that applying the new regulations to charities would be “largely unworkable and inappropriate”.

The Charity Commission also opposed the plans, and argued in its formal response to the consultation that the proposed regulations “simply do not apply” to the voluntary sector.

Caron Bradshaw, the chief executive of the CFG, said today: “CFG has been a driver for improved transparency and better reporting throughout its 35-year history. 

“However, if the government abandons the proposals it set out last year to include charities in the PIE regime, as a matter of course we will be pleased.

“In our response to the BEIS consultation last summer, we made it clear that fully implementing the proposals would have swept many charities into a framework specifically designed for private enterprise without clear purpose or justification. 

“This would have placed additional and unnecessary burdens on charities at a time when they are working even harder to do much more with a lot less.

“If the government is to go back to the drawing board, we would welcome further dialogue.

“CFG will continue to work to avoid the unintended consequences of charities being an afterthought in policy-making. Increasing trust and transparency across all sectors is an important aim, which we support, but any legislative change that unwittingly draws in charities must be balanced, proportionate and fully consulted on.”

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