News / Charities consolidation deferred two years

NHS bodies will be required to consolidate their charitable funds in their accounts from 2013/14 after an agreement was reached to extend the relevant accounting standard to the NHS.

The consolidation accounting standard – international accounting standard 27 – has been deferred for the NHS since the adoption of international financial reporting standards in April 2009.

There had been discussions about the application of the standard to the NHS, which led to the Treasury setting up an independent review to consider the accounting issues for NHS charities in the context of the government accounting framework.

A statement from the Treasury said that the government had agreed with Monitor that the accounting standards would be extended to NHS organisations, although there will be a further two-year deferral.

Although the Financial Reporting Advisory Board had been concerned about a further delay, the Department of Health had argued that, with no deferral, the change would add an accounting burden at a time of significant structural reform.

In particular it might have meant PCTs being hit by the new requirement for just one year during a period when they were being abolished.

The Charity Commission – which had originally opposed the consolidation of NHS charities’ accounts on the grounds that it would create a perception of reduced independence – acknowledged  the majority view of the linked charities review panel that consolidation is appropriate,

However, it welcomed the deferral. ‘We particularly welcome the importance of the separate disclosure of charitable funds within the group accounts of NHS bodies recommended by the panel,’ a spokesman said. ‘This is vital to transparency and understanding.’

The spokesman added that the commission was updating its guidance to charities to ‘take on board consolidation’ but that guidance on the duties of trustees would be unchanged.