Page 1, 10th September 1993

10th September 1993
Page 1
Page 1, 10th September 1993 — Audit threat to parishes

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Audit threat to parishes


CHURCH FINANCIAL EXPERTS are engaged in high-level talks with the Charity Commissioners in a bid to head off professional auditing of parish accounts.

If draft requirements of the new Charities Act are approved, parish priests could face bills of more than 4500 per year for external auditors and a mountain of extra administrative work preparing for them.

The act passed last year lays down principles of practice in a bid to tighten up financial controls on charities, obliging them to meet the standards expected of business.

But detailed accounting procedures now under negotiation could require the accounts of diocesan trusts, religious orders and Catholic charities to be professionally audited costing the Church hundreds of thousands of pounds every year.

At the moment, dioceses as charitable institutions do not have to provide independently audited accounts of their financial activities. Most produce quarterly financial statements, and individual parish priests -In accordance with Canon Law "keep the books" for submission to their diocesan trustees.

But under the new act, parishes could be classified as "branches" of the diocesan trust, each having to produce independent, professionally audited accounts which would then be "consolidated" into a diocesan financial statement.

This could cost every parish a minimum of £500, and place impossible administrative strains on already hardpressed parish priests.

"The only people who would gain from this would be the accounting profession," said one diocesan financial secretary this week.

Fergus Brotherton of Arundel and Brighton said the new regulations could force dioceses to employ hundreds Of extra people to cope with the demands of the Act: "It could make life in parishes very difficult."

Church authorities are pressing for a more relaxed and cheaper form of "independent examination" of parish finances, employing independent accountants appointed by the diocese.

Mgr Michael McKenna of Liverpool Archdiocese said the changes were more a question of standardising the presentation of accounts. "We've been meeting these accounting criteria for a long time. This is simply a bid to encourage us to be more efficient. We don't fear that, we welcome Another area of concern is the proposed requirement that charities include the value of their assets property, land and buildings in their accounts.

"If property values are included in the balance-sheet, we'll all look like millionaires many times over," said one Church source. "But that would not be a true and fair picture of our finances. We're not free to dispose of property at market values in the way that businesses are. Under Canon Law, parishes are eucharistic entities, not property to be bought and sold."

A series of well-publicised scandals involving major charities in the 1980s has prompted the government to review charity law and tighten up on controls, resulting in a set of principles laid down in the new Charity Act.

Charities are now negotiating the detailed application of those principles, but many hope the Government will back away from applying strict business standards to cash-starved charities.

Details of the accounting regulations expected of charities are now likely to be published next summer, and the act may not come into force until 1995 or 1996.

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