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INTRODUCTION

1. The Charities and Trustee Investment (Scotland) Act 2005 was passed by the Scottish Parliament on 9 June 2005 and received Royal Assent on 14 July 2005. The Act improves and strengthens the regulation of charities operating in Scotland in a way that builds on the value that charities bring to Scottish society. The majority of the provisions in the Act, relating to the basic regulation of charities by the Office of the Scottish Charity Regulator ( OSCR) in its new independent role, came into force in April 2006.

2. Following passage of the Act, the Charities Accounts (Scotland) Regulations came into force in May 2006, setting out the details of the accounting regulations that flowed from the Act - in essence setting out the various accounting rules individual charities would be required to follow; whether and how these should be subject to external scrutiny, and the deadlines for submission to the charities regulator. Scottish Ministers have powers to make regulations on this matter under section 44(4) of the 2005 Act. This consultation paper sets out proposals for amendments to the Act and the regulations drawing on experience of how they have worked in practice.

3. The proposals for amendments to the Act are drawn from recommendations made to Ministers by the Office of the Scottish Charity Regulator ( OSCR) in their Annual Report and Accounts published in September 2008 and subsequent discussion. These are minor changes intended either to give the Regulator powers to assist charities in certain situations not foreseen in the Act, or to increase the transparency of the regulatory framework.

4. The amendments to the Accounts Regulations we are minded to take forward are set out, starting on page 17. These are largely technical changes to update the existing regulations and remove uncertainty over their effect. A separate section of the consultation paper, starting on page 23, then discusses more significant changes to the reporting requirements, thresholds which determine which accounting rules, and exemptions, apply to individual charities. Here the Government would welcome views on whether we have yet reached the point where we can reduce the regulatory burden, in particular on the smallest charities. This very much depends on how far this could be done without either reducing public confidence in the sector or undermining progress in enabling the spread of good governance and financial management. A final section, starting on page 31, sets out areas of the accounts regulations others have suggested may need amendment, but where our initial conclusion is that change is not needed at this stage.

5. This consultation is your opportunity to have your say about these plans before revisions to the primary legislation and to the regulations are laid before Parliament. Although we have highlighted key areas for comment, your views on any aspect of the proposals within this document are welcome.

6. You are invited to respond before the closing date of 24 July 2009, in writing to:

Email: CharityAct@scotland.gsi.gov.uk

7. This consultation, and all other Scottish Government consultation exercises, can be viewed online at http://www.scotland.gov.uk/consultations. You can telephone freephone 0800 77 1234 to find out where your nearest public internet access point is.

Handling your response

8. We need to know how you wish your response to be handled and, in particular, whether you are happy for your response to be made public. Please complete and return the Respondent Information Form (page 40), which is enclosed with this consultation paper, as this will ensure that we treat your response appropriately. If you ask for your response not to be published we will regard it as confidential, and we will treat it accordingly.

9. All respondents should be aware that the Scottish Government is subject to the provisions of the Freedom of Information (Scotland) Act 2002 and would therefore have to consider any request made to it under the Act for information relating to responses made to this consultation exercise.

Next steps in the process

10. Where respondents have given permission for their response to be made public (see the attached Respondent Information Form), these will be made available to the public in the Scottish Government Library and on the Scottish Government web pages by the end of August 2009. We will check all responses where agreement to publish has been given for any potentially defamatory material before logging them in the library or placing them on the website. You can make arrangements to view responses by contacting the SG Library on 0131 244 4556. Responses can be copied and sent to you, but a charge may be made for this service.

What happens next?

11. Following the closing date, all responses will be analysed and considered along with any other available evidence to help us reach a decision on how to move forward. The proposed amendments to the Act require primary legislation and will need to await a suitable legislative vehicle. Changes to the accounts regulations can be taken forward more swiftly, and we would expect to lay amendment regulations before the Parliament later in the year.

Comments and complaints

12. If you have any comments about how this consultation exercise has been conducted, please send them to the address above.

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