CHARITIES Citation and commencement 1 These Regulations may be cited as the Charities (Accounts and Reports) Regulations 2000 and shall come into force on 15th November 2000. Interpretation 2 In these Regulations— “director” includes any person occupying the position of a director, by whatever name called, and in relation to a body corporate whose affairs are managed by its members means a member of the body corporate; “ex gratia payment” means any such application of the property of a charity, or any such waiver by a charity of any entitlement to receive any property, as may be authorised under section 27(1) of the 1993 Act ; “the 1993 Act” means the Charities Act 1993; “the 1995 Regulations ” means the Charities (Accounts and Reports) Regulations 1995; “financial year” shall be construed in accordance with regulation 5 of the 1995 Regulations ; “fixed assets” means the assets of a charity which are intended for use or investment on a continuing basis; “fund” means particular assets of a charity held on trusts which, as respects the purposes for which those assets are held, or as respects the powers of the charity trustees to use or apply those assets, are not identical with those on which other assets of the charity are held; “income reserves” means those assets in the unrestricted fund of a charity which the charity trustees have, or can make, available to apply for all or any of its purposes, once they have provided for the commitments of the charity and its other planned expenditure; “institution or body corporate connected with the charity” has the same meaning as in the 1995 Regulations; “the SORP ” means the Statement of Recommended Practice for Accounting and Reporting by Charities, issued by the Charity Commissioners on 17th October 2000; “special case charity” means a charity which is either— a registered social landlord within the meaning of the Housing Act 1996 and whose registration has been recorded under section 3(3) of that Act; or has during the financial year in question— conducted an institution in relation to which a designation made, or having effect as if made, under section 129 of the Education Reform Act 1988 or section 28 of the Further and Higher Education Act 1992 has effect; received financial support from funds administered by a higher education funding council or further education funding council within the meaning of the said Act of 1992 in respect of expenditure incurred or to be incurred by the charity in connection with that institution; and incurred no expenditure for charitable purposes other than the purposes of that institution or any other such institution; “trustee for a charity” includes a custodian trustee and a nominee; “unrestricted fund” means a fund which is to be used or applied in any way determined by the charity trustees for the furtherance of the objects of a charity, and “restricted fund” means any other fund of a charity. Form and content of statements of accounts 3 1 This regulation applies to a statement of accounts prepared by the charity trustees of a charity (other than a charity specified or referred to in regulation 4 of the 1995 Regulations) in accordance with section 42(1) of the 1993 Act in respect of a financial year— a which begins on or after 1st January 2001; or b which begins before that date if— i the charity trustees determine that this regulation, rather than regulation 3 of the 1995 Regulations, shall apply to the statement of accounts; and ii the charity trustees have not, before the date when these regulations come into force, either approved the accounts of the charity in respect of that financial year, or authorised the signature of an annual report in respect of that financial year in accordance with regulation 10(1)(c) of the 1995 Regulations. 2 If the charity trustees make a determination under sub-paragraph (b) above, they shall also make a determination under regulation 7(1)(b) below, if they are required to prepare an annual report in respect of the financial year in question. 3 The requirements as to form and content of a statement of accounts to which this regulation applies are those set out in the following provisions of this regulation. 4 The statement shall consist of— a a statement of financial activities which shall show the total incoming resources and application of the resources, together with any other movements in the total resources, of the charity during the financial year in respect of which the statement is prepared; and b a balance sheet which shall show the state of affairs of the charity as at the end of the financial year in respect of which the statement is prepared. 5 The statement shall be prepared in accordance with the following principles, namely that— a the statement of financial activities shall give a true and fair view of the incoming resources and application of the resources of the charity in the financial year in respect of which the statement is prepared; b the balance sheet shall give a true and fair view of the state of affairs of the charity at the end of that year; c where compliance with the following requirements of this regulation would not be sufficient to give a true and fair view, the necessary additional information shall be given in the statement of accounts or in notes to the accounts; d if in special circumstances compliance with any of those requirements would be inconsistent with giving a true and fair view, the charity trustees shall depart from the requirement to the extent necessary to give a true and fair view. 6 The statement— a shall be prepared in accordance with the methods and principles set out in the SORP; and b subject to the following three paragraphs of this regulation, shall, with respect to any amount required to be shown in the statement of financial activities or in the balance sheet, also show the corresponding amount for the financial year immediately preceding that to which the statement or balance sheet relates. 7 Where that corresponding amount is not comparable with the amount to be shown for the item in question in respect of the financial year to which the statement of financial activities or balance sheet relates, the former amount shall be adjusted. 8 Where in the financial year to which the statement of accounts relates the effect of paragraph (5) and paragraph (6)(a) above is that there is nothing required to be shown in respect of a particular item, but an amount was required to be shown in respect of that item in the statement of accounts for the immediately preceding financial year, those provisions shall have effect as if such an amount were required to be shown in the statement of accounts in the financial year to which the statement relates, and that amount were nil. 9 Where a charity has more than one fund, only amounts corresponding to the entries in the statement of financial activities relating to the totals of both or all of the funds of the charity need be shown. 10 There shall be provided by way of notes to the accounts the information specified in the Schedule to these Regulations, and proviso (ii) to regulation 5(4) of the 1995 Regulations shall have effect as if for the reference to regulation 3(4) of those Regulations there were substituted a reference to this paragraph of this regulation. 11 The balance sheet shall be signed by one or more of the charity trustees of the charity, each of whom has been authorised to do so, and shall specify the date on which the statement of accounts of which the balance sheet forms part was approved by the charity trustees. Audit and independent examination 4 In relation to a statement of accounts to which regulation 3 applies— a regulation 6(2)(e) of the 1995 Regulations shall have effect as if, for the reference to regulation 3 of those Regulations, there were substituted a reference to regulation 3 above; and b regulation 7(e)(iii) of the 1995 Regulations shall have effect as if, for the reference to regulation 3 of those Regulations, there were substituted a reference to regulation 3 above, and as if, for the reference to paragraph 1 of Part III of Schedule 1 to the 1995 Regulations, there were substituted a reference to sub-paragraphs (a) and (b) of paragraph (5) of regulation 3 above. Form and content: special cases 5 1 This regulation applies to a statement of accounts prepared by the charity trustees of a special case charity in accordance with section 42(1) of the 1993 Act in respect of a financial year which begins on or after 1st January 2001. 2 The requirements as to form and content of a statement of accounts to which this regulation applies are those set out in the following provisions of this regulation. 3 The statement shall consist of an income and expenditure account and a balance sheet as at the end of the financial year in respect of which the statement of accounts is prepared. 4 The statement shall be prepared in accordance with the following principles, namely that— a the income and expenditure account shall give a true and fair view of the income and expenditure of the charity for the financial year in respect of which the statement of accounts is prepared; and b the balance sheet shall give a true and fair view of the state of affairs of the charity at the end of that year. Audit and independent examination 6 In relation to a statement of accounts to which regulation 5 applies— a regulation 6(2)(e) of the 1995 Regulations shall have effect as if, for the reference to regulation 4 of those Regulations, there were substituted a reference to regulation 5 above and as if for the words “incoming resources and application of the resources” there were substituted the words “income and expenditure”; and b regulation 7(e)(iii) of the 1995 Regulations shall have effect as if, for the reference to regulation 4 of those Regulations, there were substituted a reference to regulation 5 above, and as if for the reference to paragraph 1 of Part III of Schedule 1 to those Regulations, there were substituted a reference to regulation 5(4) above. Annual reports 7 1 This regulation applies to an annual report prepared by the charity trustees of a charity (other than a charity specified in regulation 10(4) of the 1995 Regulations) in accordance with section 45(1) of the 1993 Act in respect of a financial year— a which begins on or after 1st January 2001; or b which begins before that date if— i the charity trustees determine that this regulation, rather than regulation 10 of the 1995 Regulations, shall apply to the annual report; and ii the charity trustees have not, before the date when these Regulations come into force, either authorised the signature of an annual report in respect of that financial year in accordance with regulation 10(1) (c) of the 1995 Regulations or approved a statement of accounts which has been prepared for the charity in respect of that financial year under regulation 3 of those Regulations. 2 If the charity trustees make a determination under sub-paragraph (b) above, they shall also make a determination under regulation 3(1)(b) above, if they prepare a statement of accounts under section 42(1) of the 1993 Act in respect of the financial year in question and the charity is one to which regulation 3 above may apply. 3 The report on the activities of a charity during the year which is required to be contained in the annual report in respect of each financial year of the charity prepared under section 45 of the 1993 Act shall specify the financial year to which it relates and shall— a in the case of any financial year of a charity in which its gross income does not exceed £250,000, be a brief summary of the main activities and achievements of the charity during the year in relation to its objects; b in the case of any financial year of a charity in which its gross income exceeds £250,000— i be a review of all activities, including— aa material transactions, significant developments and achievements of the charity during the year in relation to its objects; bb any significant changes in those activities during the year; cc any important events affecting those activities which have occurred since the end of the year and any likely future developments in those activities; and dd where any fund of the charity was in deficit at the beginning of the financial year, the steps taken by the charity trustees to eliminate that deficit; and ii contain a statement as to whether the charity trustees have given consideration to— aa the major risks to which the charity is exposed; and bb systems designed to mitigate those risks; and c in either case, be dated and be signed by one or more of the charity trustees, each of whom has been authorised to do so. 4 Subject to paragraphs (5) to (8) below, the information relating to a charity and to its trustees and officers which is required to be contained in that annual report shall be— a the name of the charity as it appears in the register of charities and any other name by which it makes itself known; b the number assigned to it in the register and, in the case of a charitable company, the number with which it is registered as a company; c the principal address of the charity and, in the case of a charitable company, the address of its registered office; d particulars, including the date if known, of any deed or other document containing provisions which regulate the purposes and administration of the charity; e a description of the objects of the charity; f the name of any person or body of persons entitled by the trusts of the charity to appoint one or more new charity trustees, and a description of the method provided by those trusts for such appointment; g the name of any person who is a charity trustee of the charity on the date when the authority referred to in paragraph (3)(c) above is given, and, where any charity trustee on that date is a body corporate, the name of any person who is a director of the body corporate on that date; h the name of any other person who has, at any time during the financial year in question, been a charity trustee of the charity; i the name of any person who is a trustee for the charity on the date referred to in sub-paragraph (g) above; j the name of any other person who has, at any time during the financial year in question, been a trustee for the charity; k a description of the policies (if any) which have been adopted by the charity trustees— i for the purpose of determining the level of income reserves which it is appropriate for the charity to maintain in order to meet effectively the needs designated by its trusts; ii for the selection of investments for the charity; and iii for the selection of individuals and institutions who are to receive grants out of the assets of the charity; l a statement regarding the performance during the financial year of the investments belonging to the charity (if any); m a description of the organisational structure of the charity; and n a description of any assets held by the charity or by any charity trustee of, or trustee for, the charity, on behalf of another charity, and particulars of any special arrangements made with respect to the safe custody of such assets and their segregation from assets of the charity not so held and a description of the objects of the charity on whose behalf the assets are held. 5 The Commissioners may, where they are satisfied that, in the case of a particular charity or class of charities, or in the case of a particular financial year of a charity or class of charities— a the disclosure of the name of any person whose name is required by any of sub-paragraphs (f) to (j) of paragraph (4) above to be contained in the annual report of a charity could lead to that person being placed in any personal danger; or b the disclosure of the principal address of the charity in accordance with paragraph (4)(c) above could lead to any such person being placed in any personal danger, dispense with the requirement— i in any of sub-paragraphs (f) to (j) of that paragraph, so far as it applies to the name of any such person; or ii in sub-paragraph (c) of that paragraph, so far as it applies to the principal address of the charity, as the case may require. 6 In the case of a charity having more than 50 charity trustees on the date referred to in paragraph (4)(g) above— a that sub-paragraph shall have effect as if for the words “name of any person who is a charity trustee of the charity” there were substituted the words “names of not less than 50 of the charity trustees of the charity, including any charity trustee who is also an officer of the charity”; and b paragraph (4)(h) shall have effect as if, at the end of the sub-paragraph, there were inserted the words “other than the name of any charity trustee whose name has been excluded from the report in pursuance of sub-paragraph (g) above”. 7 In the case of a report prepared under section 46(5) of the 1993 Act (excepted charities which are not registered), paragraph (4) above shall have effect as if— a in sub-paragraph (a) the words from “as it appears in the register of charities” to the end, and b in sub-paragraph (b) the words “the number assigned to it in the register and,”, were omitted. 8 In the case of a report in respect of a financial year of a charity in which its gross income does not exceed £250,000, paragraph (4) above shall have effect as if sub-paragraphs (l) to (n) were omitted. Minor amendments to the 1995 Regulations 8 1 In regulation 2(1)— a after the words “deposit fund established by a scheme” there shall be inserted the words “under section 22A of the Charities Act 1960 or”; and b after the words “investment fund established by a scheme” there shall be inserted the words “under section 22 of the Charities Act 1960 or”. 2 For regulation 4(7)(a) there shall be substituted the following— a is a registered social landlord within the meaning of the Housing Act 1996 and whose registration has been recorded under section 3(3) of that Act; or . 3 In regulation 9(2)— a in sub-paragraph (b), after the words “Comptroller and Auditor General” there shall be inserted the words “or by the Auditor General for Wales”; and b in sub-paragraph (c), after the words “have been” there shall be inserted the words “or will be”. Paul Boateng Minister of State Home Office 19th October 2000