Charities ask to be excluded from audit reforms

The Charity Commission England and Wales has pushed back against a proposal to introduce a new framework for audit standards on large charities in the UK.

Writing in response to the government white paper Restoring Trust and Confidence in Audit and Corporate Governance, the Charity Commission England and Wales has requested that charities be excluded from the corporate reforms.

Responding to a series of corporate failures and calls for large-scale changes in audit regulations, the report seeks to impose a new set of standards on public interest entities (PIEs), and recommends expanding the definition of what type of firms qualify.

Currently, PIEs are defined as publicly traded companies, banking institutions and insurance firms.

The government is now proposing to extend the definition of a PIE to include large companies regardless of whether they are publicly traded.

The government has not currently settled on how to define the new parameters, but has laid out two options that would capture large charities with annual income over at least £200 million and large staffing pools, unless they were explicitly made exempt.

The commission’s statement supported the government’s objective to improve the UK’s audit and corporate governance framework, but made clear it believed the imposing new audit regulations on charities would place an undue financial burden on the sector.

“The commission’s position is that it does not support extending a framework designed with the interests of shareholders and for-profit commerce in mind to the charity sector where these imperatives simply do not apply,” the statement said.

“We therefore recommend that charities are not included within the definition of public interest entities and associated corporate reforms.”

Source Financial Accountant click here to read more.