I was recently asked to run a training session for a local charity regarding common accounting issues and, whilst preparing for this, I was surprised to discover the number of sets of financial statements submitted to the Charity Commission that they deem to be falling short of their minimum standards.
Although the quality of accounts is seen to be increasing, approximately 25% of those submitted did not meet the basic standards set.
The main reasons for the failure in meeting these standards were:
- The annual report did not adequately cover the objectives and activities of the charity;
- The accounts did not balance or were incomplete;
- A proper Independent Examination was not completed;
- One of (i) annual return (ii) examiner’s report or (iii) accounts were missing;
- The accounts were inconsistent or were not transparent.
Upon reviewing a number of sets of accounts submitted at the Charity Commission, I found that many of these were not following the correct legislation, did not explain what the charity’s aims were, had figures which were transposed in the supporting notes and were missing several key disclosures.
Although the Trustees may use an accountant to prepare the financial statements, it is ultimately their responsibility to ensure that the accounts and the annual report are prepared to the required standard and subjected to the appropriate level of external scrutiny.
Submitting inaccurate or incomplete accounts to the Charity Commission, which are on public record, could affect the reputation of the charity and potentially its success in obtaining funding.
At Lambert Chapman LLP, we have a team who have been specifically trained to deal with charity accounts and receive continued training to ensure that they are kept up to date with any changes in the legislation. The software that we use is, as would be expected, fully compliant with the current legislation, Charities SORP (FRS 102).
We are able to assist charities with their reporting requirements, whether they require an independent examination, an
If you are a Trustee and would like assistance in preparing your charity’s accounts, please contact Richard Hamilton on 01376 326266.
The views expressed in this article are the personal views of the Author and other professionals may express different views. They may not be the views of Lambert Chapman LLP. The material in the article cannot and should not be considered as exhaustive. Professional advice should be sought in connection with any of the issues contained in the article and the implementation of any actions.