Commentary on Provisions Charity accounts Section 10 – Preservation of and access to charity accounts and independent reports on accounts
63.Section 44(1)(b) of the 2005 Act requires all charities to prepare a statement of account for each financial year, and section 44(1)(d) requires a copy of the statement to be sent to OSCR. While there is a requirement under section 44(1)(c) for that statement to be independently examined or audited, the rules about submitting the statement of account to OSCR did not originally extend to the report on that statement that is prepared by the independent examiner or auditor under (as applicable) regulation 10(4) or 11(3) of the Charities Accounts (Scotland) Regulations 2006 (SSI 2006/218) (the “2006 Regulations”).
64.Subsection (2)(a)(i) of this section of the Act moves the requirement to obtain a report into the 2005 Act itself. The details of what the report must cover will continue to be specified in regulations. Subsection (2)(a)(ii) of this section of the Act then expands the rule about submitting the statement of account to OSCR so that it also now covers this report.
65.Section 23(1)(b) of the 2005 Act provides that a charity must provide a copy of its latest statement of account to anyone who reasonably requests it. This is expanded by section 11(3) of the Act to also cover the independent report. However, there was originally no requirement for OSCR to retain the statements of account submitted to it under section 44 or to make them publicly available.
66.Subsection (3) of this section of the Act changes that by inserting a new section 45B (public access to charity accounts kept by OSCR). It imposes a duty on OSCR to keep any copy of a statement of account and independent report sent to it under section 44(1)(d) for at least 5 years from the end of the financial year to which the document relates. It further requires OSCR to make such statements of account and independent reports available for public inspection. It is expected that OSCR will make such statements publicly available in the same manner as it does in relation to the Scottish Charity Register, by using its website to make the accounts widely and freely available and that it will publicise those arrangements as it does in relation to the Register. However, the accounts and independent reports will also be available, free, at OSCR’s offices and might also be made available otherwise as OSCR thinks fit.
67.Subsection (2)(b) of this section also inserts a new subsection (4A) into section 44 of the 2005 Act which provides that any regulations made under section 44(4) must be framed so that a charity is not required to include any information in its statement of account that is excluded from its entry in the Register under section 3(4). This is intended to work in harmony with the dispensation mechanism under that section as amended by section 2 (see paragraphs 12 and 13 for further explanation). As at the time of publication of these notes (August 2023), the rules about a charity’s preparation of accounts are contained in the 2006 Regulations, which are made in exercise of the powers conferred by section 44(4). The 2006 Regulations already provide that certain information is not required to be included if the charity is entitled to have that same information excluded from its entry in the Scottish Charity Register. However, some consequential changes and minor adjustments may be needed in order for those regulations to comply fully with the new section 44(4A). This can be achieved under the existing power in section 44(4).