The Charity Commission has just published its report on its compliance work for the year to March 2008 and as an accounting firm, it is perhaps not unsurprising that we first turn to see how many inquiries are reported as regards failures of accounting that cause concern to the Commission.
During the year, the Commission carried out 799 assessments into concerns raised by the public and other complainants of which 42 inquiry reports were published on their web site. This included 19 accounting issues, although in no single case were reports solely investigating accounting irregularities; there were always other issues involving those charities e.g. fund-raising issues, trustee issues and conflicts of interest to name only a few.
Interestingly, the report (Charities Back on Track 2007-2008 - http://www.charity-commission.gov.uk/news/track.asp) highlights 9 of the most serious issues and areas of greatest risk for charities e.g. significant financial loss to the charity, serious harm to beneficiaries including vulnerable beneficiaries, threats to national security, damage to public trust and confidence in charities. All such reports are of course very worrying and we have found in the past that poor accounting is usually just one example of things going awry elsewhere in the charity and this is borne out in the report.
We would point out that, without being in the slightest bit complacent, in the South East of England alone there are over 28,800 charities with combined income of over £6.5bn but over half these charities have an income of less than £10,000 and only 3% have an income in excess of £1m (353)*.
What does all of this teach us? Well, firstly the charity and not for profit sector comprises a vast array of charities just as diverse as the commercial sector. Secondly in the main, most charities are well run and those involved in them take their roles seriously and much time and effort is spent in ensuring that continues. Thirdly, this sector, in line with other sectors, is becoming more regulated and if a charity is to continue it must abide by all the rules and regulations that govern it and there are no shortcuts to achieving this.
* Source: Charities Back on Track 2007-2008
For further information, please cotnact Richard Limburg or Vantis' Charity & Not for Profit Group or please complete the online enquiry form below.