Charities Bill [HL]

moved Amendment No. 50:"After Clause 28, insert the following new clause—"    ““GROUP ACCOUNTS (1)   After section 49 of the 1993 Act insert— ““49A   GROUP ACCOUNTS The provisions of Schedule 5ZA to this Act shall have effect with respect to— (a)   the preparation and auditing of accounts in respect of groups consisting of parent charities and their subsidiary undertakings (within the meaning of that Schedule), and (b)   other matters relating to such groups.”” (2)   Schedule (Group accounts) (which inserts the new Schedule 5ZA into the 1993 Act) has effect.”” The noble Lord said: This is a large group of government amendments. I shall not detain the Committee too long in explaining them, but some words need to be put on record so that the amendments can be made more comprehensible. I shall try. In Grand Committee before the election, my noble friend Lord Dubs moved amendments on group accounting by charities. The purpose of those amendments was to introduce a requirement on a charity with subsidiaries under its control—we shall call it the ““parent”” charity—to prepare annual accounts relating to the whole group consisting of the parent and all its subsidiaries. The present requirement is that the parent and each of its subsidiaries should prepare accounts relating to itself alone. That does not give the reader of any individual accounts in any sense an adequate picture of the interconnected web of financial affairs of the group as a whole and, in some cases, can effectively allow the   concealment of substantial flows of income and expenditure. I understand from the Charity Commission that, in practice, about 95 per cent of parent charities already prepare group accounts in the interests of transparency, so the new provisions will simply require them to carry on doing what they are already doing and will not impose any novel regulatory burden. I responded sympathetically at the time to my noble friend Lord Dubs and agreed to consider his amendments with a view to tabling government amendments on Report. In the event and given the relatively complex drafting, there was insufficient time to prepare those amendments between Committee and Report. Members of the Committee will notice that the amendments are rather lengthy; we have taken the opportunity of the period since the Bill was reintroduced to prepare them. I shall list the main provisions of the amendments. The first is to impose a general requirement to prepare group accounts on a charity which is a parent charity. The second is to allow my right honourable friend the Home Secretary by regulation to make exceptions to that requirement. That power could, for example, be exercised to relieve very small groups from the group accounting requirements in the interests of avoiding excessive burdens. Thirdly, the amendments allow regulations to prescribe the form and content of group accounts. Fourthly, they require a professional audit   of the accounts of larger groups and a lesser examination of the accounts of other groups, using the same audit thresholds as apply to individual charities under the Bill. Fifthly and finally, they require the annual reports of parent charities to cover the group’s activities as a whole. Members of the Committee will no doubt want to study the new provisions closely at greater leisure, and I do not intend to detain the Committee with a detailed exposition of each one. Within the general framework that we propose, we remain open to sensible suggestions for refinements at the Bill’s next stage. People should not take that as too big an invitation but, if something does not seem to suit or work, we want to know about it. The Committee will notice that Amendment No. 58 has been grouped with the amendments but does not really belong with them. I shall move it in its proper place. I beg to move.