Charity Commission: revisions to the Annual Return 2023-25

Charity Commission's consultation about approach to the Annual Return (AR) and a set of proposed new questions. This would apply to charities’ financial years starting on or after 1 January 2023.

ACCA welcomes the opportunity to respond to the Charity Commission’s proposals in relation to the Annual Return (AR) for 2023.

ACCA takes an active interest in the not-for-profit sector, encouraging our members to give back to their local communities and supporting our members, past and present, and their dependents who are experiencing financial difficulties through The Chartered Certified Accountants’ Benevolent Fund.

In general terms, we understand the Commission’s rationale for collecting data via the AR but are concerned at the possible uses of the data collected. We are not yet convinced that the Commission has struck the correct balance between its need for sector-wide data to perform its
regulatory duties, and the cost incurred by charities in completing the AR. We encourage the Commission to consider the significant impact that some of the questions proposed will have on charities at the lower end of the spectrum, and those charities where trustees – who are, by the
nature of their role, themselves volunteers – may not necessarily have a relevant financial or legal background.

We commend the Commission for changing most questions to a simple yes/no response. We have serious concerns however that some of the most difficult questions proposed for a charity to answer have little or no accompanying guidance; and where guidance is provided, preparers
must look at both a glossary and explanatory guide rather than having these embedded in the return itself. We have identified opportunities to enhance the guidance, particularly for respondents without a background in finance, in our responses below. It is essential that the AR
has a “save” button to allow respondents to save their progress while completing the form.

Ultimately the Charity Commission needs to consider whether charities are resourced to invest the requisite time and energy in completing the AR as proposed, or whether – as is the case in many charities at present, particularly at smaller charities – the AR can be a last minute consideration once the trustees’ report and annual accounts are signed. If the Commission wishes to obtain quality data on the sector to any degree of accuracy, we encourage the Commission to include the new questions in the ‘Part B’ structured financial data survey for charities with income over £500,000 rather than every charity with income above £10,000.

We question whether the questions proposed might be collected via other means; for example, questions over strategy and governance might be better remedied by amending the Charity SORP in respect of the trustees’ annual report rather than the AR itself.

To read the full response, please download the consultation PDF document.