Keep abreast of NHS charity developments

by Nigel Davies

06 September 2016

The Charity Commission is, of course, keen for NHS practitioners to keep up-to-date with recent developments in charity accounting and governance, but we also want to hear their views on the future of charitable funds reporting.

In the context of the NHS, NHS charities may appear rather small against the size of the average acute ward. But, relative to the broader charity sector, they often count as large charities.

Some 85% of registered charities have incomes of £250,000 a year or less. If your NHS charity’s income exceeds £500,000 then your charity is amongst the largest 10% and counts as ‘large’ in terms of reporting and accounting; a lot is expected of you both by the Charities Statement of Recommended Practice (SORP) and the charity regulator, the Charity Commission.

The majority of NHS charities have a corporate trustee, usually the linked NHS body, and whether you consolidate your linked charity or not, the board of the NHS body is effectively the mind of the corporate trustee. It follows that the board needs to be engaged with their responsibilities, which includes the trustees’ annual report and approving the accounts of the charity.

With capital funding tight, charitable funds could be useful to NHS organisations, given the zero-rating relief available on some items. However, there have been scandals in the wider charity sector and there are new regulatory and reporting requirements that the board must be aware of. They must also know what expenditure they can meet from charitable funds. With NHS budgets under strain, spending charitable funds wisely is essential to avoid a breach of trust occurring. The emphasis will be on practical advice, but for the framework do look at the commission’s NHS specific guidance for further help.

NHS bodies have the manual for accounts and charities have their own version of an accounting manual in the SORP. If unfamiliar with the SORP it can be downloaded from the dedicated SORP website, while the HFMA has produced a worked accounts example to guide to help you in applying it.

There are differences between NHS accounting, which uses International Financial Reporting Standards (IFRS) and the charity SORP, which is linked to UK Generally Accepted Accounting Practice (GAAP).

Smaller NHS charities, with income £250,000 or less, can complete simpler receipts and payments accounts and avoid the SORP. This is worth considering, but even here the annual report must include certain elements – see our guidance CC15c Charity reporting and accounting – the essentials.

The current SORP research consultation is seeking views on changes to the annual report and format of the accounts. The consultation will be covered in a workshop at the HFMA charitable funds conference in October. As well as an opportunity to understand how it affects your charity, it will also allow you to feed back concerns to the HFMA, informing its response to the SORP consultation. There has never been a better time for you to shape the future of charity reporting and accounting.


  • Nigel Davies will present the SORP workshop at the HFMA charitable funds conference on 19 October. Click here for further details


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