The Auditing Practices Board (APB) has published a consultation draft of a revision of Practice Note (PN) 11: “The Audit of Charities in the United Kingdom”. The consultation period ends on 10 July 2008.

The current version of PN 11 was issued in 2002 and has since been supplemented by Bulletin 2005/1: Audit risk and fraud – supplementary guidance for auditors of charities.

The update to PN 11 reflects:

• the replacement of Statements of Auditing Standards by ISAs (UK and Ireland);
• changes to the Charities Act 1993 (which apply to charities in England and Wales) as a result of the implementation of the Charities Act 2006 on 1 April 2008;
• changes to the legal and regulatory arrangements for charities in Scotland, including the establishment of the Office of the Scottish Charity Regulator (OSCR) which apply to accounting periods commencing on or after 1 April 2006;
• changes to the guidance on the Charity Commission’s interpretation of ‘material significance’ in the context of whistleblowing responsibilities.

Changes to the legal and regulatory arrangements for charities in Northern Ireland have been proposed but, as these are not yet in a sufficiently final form, they have not been referred to in the consultation draft. If new legislation is approved before PN 11 is finalised, reference will be made to it.

Richard Fleck, APB Chairman, said:

“There have been a number of significant changes in law and regulation relating to charities since PN 11 was issued in 2002, and these are reflected in this consultation draft. In particular, illustrative auditor’s reports based on the new legislation are included in an Appendix, and guidance is provided on the new regulatory arrangements in Scotland. The APB welcomes comments on the draft from auditors and others with an interest in charities”.

Copies of the consultation draft may be downloaded from the Publications (Exposure Drafts) section of this website.

1. The Financial Reporting Council (FRC) is the UK’s independent regulator responsible for promoting confidence in corporate reporting and governance. Its functions are exercised principally by its operating bodies (the Accounting Standards Board, the Auditing Practices Board, the Board for Actuarial Standards, the Financial Reporting Review Panel, the Professional Oversight Board and the Accountancy and Actuarial Discipline Board) and by the Committee on Corporate Governance.
2. The APB is committed to leading the development of auditing practice in the United Kingdom and the Republic of Ireland so as to:
   • establish high standards of auditing;
   • meet the developing needs of users of financial information; and
   • ensure public confidence in the auditing process.
3. The APB issues Practice Notes to assist auditors in applying auditing standards of general application to particular circumstances and industries. Practice Notes are persuasive rather than prescriptive. However, they are indicative of good practice even though they may be developed without the full process of consultation and exposure used for auditing standards.
4. The revised PN has been prepared with advice and assistance from staff of the Charity Commission and OSCR.
5. The legislative changes that became effective on 1 April 2008 are set out on the Office of the Third Sector’s website -
   http://www.cabinetoffice.gov.uk/third_sector/law_and_regulation/implementation/audit_accounting.aspx  
6. For further information please contact Jon Grant, APB Executive Director, on 020-7492-2410.