The use of charitable status as a basis for regulation of nonprofit accounting

In the UK, much regulation of nonprofit organisations (NPOs) is linked to charitable status – but a charity is not a legal form: many types of organisation can be recognised as charities if they meet certain tests, and not all NPOs are charities. Recent legislation has introduced changes to the definition of charity, and significant changes in the regulation of charities, especially on accounting issues, were implemented in England and Wales in 1996 with updates in 2000, 2005, 2008 and 2009. A different charity accounting regime applies in Scotland, and new proposals were recently enacted in Northern Ireland. Yet the UK has no specific accounting framework for those NPOs that are not charities: everything hinges on the issue of charitable status. Drawing on legislative analysis, existing literature and fieldwork, this paper asks how far the various charity reforms implemented over the period 1996–2009 have led to an effective basis for the regulation of NPO accounting in the UK.