The new body would be able to audit accounts

Ministers have been looking to tighten up regulation of the charity sector since a report made recommendations two years ago.

Confirmation of the timescale comes within days of a decision by the Court of Session in Edinburgh to freeze the accounts of Breast Cancer Research (Scotland).

It followed claims of "mismanagement or misconduct" in the way the organisation was run.

The court heard that an investigation by the Scottish Charities Office had found that only �1.5m of �13m raised had been donated to good causes.

Ministers want to appoint a charity regulator by the end of the year and have an agency set up and in place by 2004 Executive spokeswoman

The executive said that case had nothing to do with the moves of ministers on the issue of charity regulation.

Former justice minister Jim Wallace signalled in December last year the executive's intent to set up the watchdog.

A spokeswoman said the provisional name for the new body was the Office of the Scottish Charity Regulator.

Where the Scottish Charities Office can presently only probe an organisation when a complaint is made, the new body would have the statutory power to audit accounts annually.

"Ministers want to appoint a charity regulator by the end of the year and have an agency set up and in place by 2004," the spokeswoman said.

"The agency would have a number of powers, such as monitoring charities that allow for the annual submission of reports and accounts, depending on the size of the charity."

Charities report

She said the decision had been taken in response to the McFadden Commission Report, published in April 2001, which had looked at the state of charity law in Scotland.

"The move to set up the Office of the Scottish Charity Regulator has nothing to do with the recent court case," she said.

Following the application to the Court of Session in Edinburgh, Breast Cancer Research (Scotland) is no longer allowed to present itself as a charity.

The existing trustees have been suspended, as has its commercial fundraiser.

Charity bank accounts have also been frozen and a judicial factor has been appointed to manage the charity in the meantime.