Charity regulators urge auditors and independent examiners to be more proactive in reporting concerns

Reporting relevant matters of interest: new insights for auditors and independent examiners

UK charity regulators are today encouraging auditors and independent examiners to be more forthcoming with concerns they come across in charity finances or governance during the course of their work.

Reporting of relevant matters of interest to UK charity regulators is a joint publication from the Charity Commission for England and Wales, the Scottish Charity Regulator (OSCR) and the Charity Commission for Northern Ireland.

This is the first time the regulators have provided examples on where reporting would be helpful by auditors and independent examiners when reporting matters that are relevant but not a legal requirement to report.

Today’s publication advocates a ‘when in doubt, report it’ approach and includes examples of relevant matters which may be reported:

  • insecure funding putting beneficiaries at risk – for example, a charity established to care for vulnerable adults and children is reliant on a single contract for 90% of its income in the reporting period and the trustees are uncertain whether they will be able to secure future funding at the current level when the contract is renewed the following year
  • donation that may indicate vulnerability to abuse – for example, a large donation is made via an intermediary organisation, restricted to teaching the strict beliefs of a particular religion and requires educational materials to be purchased from a specified overseas source
  • lack of financial oversight by the whole trustee body - for example, minutes show that the finances of a large charity are only considered annually during a presentation from the CEO

Nigel Davies, Head of Accountancy Services at the Charity Commission for England and Wales, said:

Last year’s Public Administration and Constitutional Affairs Committee report on Kids Company noted that auditors have been too reticent when it comes to reporting matters of concern that would be of interest to the regulator. Through this new publication we are encouraging and enabling the profession to step up and engage with us more readily on a proactive basis.

Myles McKeown, Head of Compliance and Enquiries at Charity Commission for Northern Ireland said:

With over 200,000 registered charities operating across the UK we as regulators cannot possibly upturn every stone, and so auditors and independent examiners have an incredibly important role to play in helping us regulate effectively.

Laura Anderson, Head of Professional Advice and Intelligence at OSCR said:

This document is a collaborative initiative between UK regulators. This joined up approach to guidance has enabled us to provide the most consistent and comprehensive insights on areas we encourage auditors to report to us, drawing on UK-wide experience across the sector.