According to an article in ThirdSector (27 October 2009), The Charity Commission appears to be heading for a showdown with the Department of Health (DH) over accounting procedures for NHS charities in England and Wales.
Senior Department of Health official Janet Perry has told health authorities that any NHS body that is the sole trustee of a charity must move that charity’s assets onto its own balance sheet.
Her position relies on a recently introduced international public accounting standard that says public sector bodies must consolidate the accounts of any organisations they control that have an income above a certain level. The DH estimates this to be about 30 of the 282 NHS charities that have NHS bodies as sole corporate trustees.
But the Commission is planning to write to the health authorities telling them they must not consolidate NHS charities’ accounts. Its official guidance says it is “wholly inappropriate” that charitable funds should ever appear on the balance sheets of public sector organisations, because it gives the impression that charitable assets are controlled by government.
Nick Brooks, head of not-for-profit at accountancy firm Kingston Smith, called the DH position “accounting dogma gone barking mad”. He said: “Consolidation should occur only if there is ownership. If you would not own the funds if the other organisation was wound up, you should not consolidate those funds into your own accounts.”
Jonathan Brinsden, a partner at specialist charity law company Bircham Dyson Bell, said he believed the commission was right to take a stand against the DH, but that corporate trustees would now be left in an invidious position.
“If I was in this situation, it would be impossible to know which authority to listen to,” he said. “Nor do I know how this conflict can be managed.”
A spokeswoman for the Commission said: “We don’t agree with the interpretation in the Department of Health’s letter. We will be following up with the Department of Health on this issue accordingly, and will also be writing to strategic health authority directors of finance to make our position clear.”
Source: ThirdSector – click here.