Charity review finds drop in reporting standards

A review by the Charity Commission of charity’s public reporting has shown a decrease in the number that meet the basic benchmark for audit quality, the first time that such reviews have found a ‘significant deterioration’

The number of accounts of acceptable quality peaked in 2013/14, when nearly 80% of charity accounts surveyed met the required quality. In the most recent accounts examined, only 70% met the basic benchmark, compared to 74% in the previous review.

Of the 30% that failed to meet the standards set for the review, nearly half (12%) did so because ‘all of the required documents were submitted, but one of them was inadequate’, such as providing little or no information on the charity’s goals and activities.

Of the remainder, half (9%) provided all of the required documents but at least two were inadequate, ‘such as incomplete accounts, an independent scrutiny report that did not have the required wording or an overall lack of transparency’.

The other half failed to submit any form of independent scrutiny report, with all in this category missing at least of the trustees’ annual reports and accounts or submitting inadequate documents.

According to the Commission, ‘The quality of the accounts in our samples fell slightly in each of our last two reviews, but this year is the first time we have found a significant deterioration since we began assessing accounts quality’.

The review, which took a random sample of 105 accounts submissions, looked at the charity accounts to see if they contained three items which the Commission has determined to be of significance in improving public trust and confidence, based on ‘whether each set of accounts met the basic requirements of the users of those accounts, rather than on strict technical compliance with the Charities Statement of Recommended Practice (SORP) and other reporting requirements’.

In each case the Commission looked to see if the accounts contained a trustee’s annual report, which explains ‘what activities the charity had carried out during the year to achieve its purposes’; the report of an independent examination of the charity’s accounts, including an audit if required; and the accounts themselves, ‘prepared on an accruals (or SORP) basis if required due to the charity’s size or because it is a company’, and including a balance sheet and a statement of financial activities.

All registered charities must publish a trustees’ annual report and accounts. Additionally, those with an income over £25,000 are required to arrange for an independent scrutiny of their accounts.

Accounts monitoring review: public reporting by charities is here

Report by James Bunney

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