Restoring trust in audit and corporate governance
Following the findings of the Kingman Review, the CMA Study, and the Brydon Report, the Government has opened a consultation aiming at restoring trust in audit and corporate governance. This consultation is wide-ranging and considers a great many potential changes to regulation concerning these areas, some of which may influence charities and non-profit organisations.
How does this effect the Not-for-Profit Sector?
Whilst the majority of issues discussed in the paper impact all sectors through audit, there is one particular section that this edition of eNews will bring attention to. Specifically, a consideration of whether large third sector entities (including further education institutions, charities, housing associations and more) could be considered Public Interest Entities (or PIEs), given the often-public nature of charitable purposes.
Public interest Entities have greater reporting requirements than other entities, and up until now their definition has been limited to specific types of entities that the public has a vested interest in, for instance insurance providers.
The consultation shows that the Government is open to the possibility of larger charities meeting the definition of Public Interest Entities, with the caveat that they do not want to create a regulatory gap for the larger entities, and they also understand that there is already sector-specific regulation via the Charity Commission and related bodies.
A further consideration is that an appropriate measure to avoid these concerns might be a different threshold to be considered a PIE for third sector organisations given their relative size. A potential alternative threshold was placed at £100m.
The consultation is due to close on the 8th of July, and so no changes have yet been made. But we will be able to further investigate the impact of this movement depending on the results of the consultation.