The Charities (Accounts and Reports) Regulations 2005

Explanatory Note

(This note is not part of the Regulations)

These Regulations (“the 2005 Regulations”), which extend only to England and Wales, make provision with respect to the accounts of charities, the financial years of a charity, the requirements relating to audit or examination of charity accounts, and the annual reports of charity trustees. The Regulations do not apply to exempt charities, and only the provisions relating to annual reports apply to charitable companies.

The 2005 Regulations replace provision made by the Charities (Accounts and Reports) Regulations 1995 (S.I. 1995/2724) (“the 1995 Regulations”) and by the Charities (Accounts and Reports) Regulations 2000 (S.I. 2000/2868) (“the 2000 Regulations”). The 2005 Regulations apply in the case of financial years which begin on or after 1st April 2005, or which begin before that date, if trustees choose to prepare accounts and reports in accordance with these Regulations. Subject to that, the 1995 and 2000 Regulations will continue to apply in relation to financial years beginning on or before 31st March 2005.

Regulations 3, 4 and 5 and the Schedules prescribe the form and contents of statements of accounts prepared by charity trustees under section 42(1) of the Charities Act 1993 (“the 1993 Act”), including the information to be provided by way of notes to the accounts and the methods and principles applicable.

Regulation 4 and Schedule 2 apply to accounts for common investment funds (other than pooling scheme funds) and for common deposit funds (“investment funds”).

Regulation 5 applies to accounts for charitable registered social landlords and for charities conducting certain types of higher education institution.

Regulation 3 and Schedule 1 apply to accounts for other charities.

Regulation 6 defines the financial year of a charity for the purposes of the 1993 Act and regulations made under the Act.

Regulation 7 deals with the duties of auditors and the reports which they are required to make. Regulation 8 deals with the reports of independent examiners. Regulation 9 makes supplementary provisions with respect to audit and independent examination and regulation 10 prescribes the circumstances in which dispensation from the requirement to have accounts audited or examined may be given by the Charity Commissioners.

Regulations 11 and 12 deal with the annual reports which charity trustees are required to make to the Charity Commissioners. Regulation 12 applies to investment funds, regulation 11 applies to other charities.

The Statement of Recommended Practice for Accounting and Reporting by Charities, which is referred to in regulation 2, may be obtained from the Charity Commission, Harmsworth House, 13-15 Bouverie Street, London EC4Y 8DP, and from its website www.charitycommission.gov.uk.

The Statement of Recommended Practice for Financial Statements of Authorised Funds, which is referred to in Schedule 2, may be obtained from the Investment Management Association, 65 Kingsway, London WC2B 6TD, and from its website www.investmentuk.org.

Regulatory Impact Assessments in relation to these Regulations (one for the provisions applying to investment funds, one for the provisions applying to other charities) have been placed in the libraries of both Houses of Parliament, and copies may be obtained from the Charities Unit, Home Office, Peel Building, 2 Marsham Street, London SW1P 4DF.