Update: these changes were accepted at the 2014 MCG AGM.
In this post we propose a change to the Museums Computer Group (MCG)’s Constitution to clarify the current use of the term ‘audit’ and update the language of the Constitution to match past MCG practice.
While organising the 2013 accounts for the 2014 MCG AGM, MCG Treasurer Alison Bean discovered that the language used in the Constitution to describe the ‘auditing’ of our accounts did not accurately describe past and current practice. On seeking further advice, Alison found that the term ‘audit’ has a specific meaning which differs from MCG practice. A formal audit subjects a set of accounts to a high level of scrutiny, can only be undertaken by a qualified auditor, and includes a legally-binding statement of opinion from the auditor that the finances of the organisations comply with all international laws, statutes and regulations.
After further investigation, it seems that a formal audit is not required for an organisation like the MCG. Under the Companies Act 2006, which came into law in October 2012, ‘an unincorporated charity requires an audit only if gross income exceeds £500,000 or both gross assets exceed £3,260,000 and gross income exceeds £250,000’. MCG is neither incorporated nor has a large gross income or assets, and according to advice from the ACCA (Association of Chartered Certified Accountants) and ICAEW (The Institute of Chartered Accountants in England and Wales) the need for the accounts of a body such as MCG to undergo an annual audit depends on its constitution.
While the MCG Constitution (below) includes references to an annual audit, we believe that the term ‘audit’ in the MCG’s Constitution was intended to mean ‘independent review’ rather than ‘formal audit’, particularly as past practice had been to have a volunteer (a qualified accountant) review the MCG’s accounts and produce an accountant’s report. This accountants report provides a level of assurance that a qualified third-party has examined the accounts, and in the past this has satisfied MCG’s membership. Accordingly, we would like to update the Constitution to reflect our understanding of the situation.
At the 2014 AGM we will also be discussing the possibility of the MCG becoming an Association Charitable Incorporated Organisation (CIO), in which case a new Constitution will be needed, but whether or not this goes ahead, we would like to ensure that the Constitution accurately reflects past and current practice.
Current text (MCG Constitution v. 2.2)
The accounts of the Group shall be audited annually by the Auditor(s) and shall be presented by the Treasurer for approval to the Annual General Meeting following the end of the financial year.
8.6 REPORTS AND ACCOUNTS
The report of the Committee; the income and expenditure account and balance sheet; and the report of the Auditor(s) shall be submitted for approval to the Annual General Meeting.
The Auditor(s), who shall be professionally qualified, shall be proposed, seconded and elected by the members present at the Annual General Meeting.
Proposed changes (MCG Constitution v. 2.3)
7.4 INDEPENDENT REVIEW
The accounts of the Group shall be subjected annually to an independent review by an Independent Reviewer(s), normally a qualified accountant(s), and shall be presented by the Treasurer for approval to the Annual General Meeting following the end of the financial year.
8.6 REPORTS AND ACCOUNTS
The report of the Committee; the income and expenditure account and balance sheet; and the report of the Independent Reviewer(s) shall be submitted for approval to the Annual General Meeting.
8.7 INDEPENDENT REVIEWER(S)
The Independent Reviewer(s), who shall be professionally qualified, shall be proposed, seconded and elected by the members present at the Annual General Meeting.