Trustees are not doing enough to hand paperwork over to auditors and advisers to meet statutory deadlines for filing of accounts say Harris & Co accountants Northampton
The Charity Commission has conducted an analysis of charities and the way in which they file accounts and found that trustees need to do more to ensure the necessary paperwork is handed over to auditors and advisers well in advance of statutory deadlines.
The Commission’s latest register shows that of the approximately 61,000 charities with an income of over £25,000, around one in 11 – or 5,334 – are currently listed as being in default.
Towards the end of 2013, the regulator began a rolling programme of class actions against charities considered ‘double defaulters’ because they failed to file their accounts on time for two out of the five previous years.
The first phase focused on 12 charities with an income over £500,000, while the second examined 12 charities in the £250,000 to £500,000 income bracket.
Last month the Charity Commission announced that 14 charities out of the total cohort had now complied with their reporting obligations, while the remaining 10 remain subject to investigation.
Sam Younger, chief executive of the Charity Commission, said:
‘We will not tolerate charities that demonstrate contempt for the public they are accountable to by failing to meet reporting requirements. We are continuing to target double-defaulting charities and we will pursue these breaches of duty.’
The Charity Commission’s analysis rate shows an 86% compliance rate for financial reporting and says its investigations indicate common excuses for late filing are that trustees do not know what paperwork is needed and fail to hand over the necessary information to their auditors and accountants in sufficient time for the accounts to be prepared by the deadline.
Michelle Russell, Charity Commission’s head of investigations and enforcement, said:
‘None of these reasons alleviate the trustees from the duty to file accounts with the Commission on time. Not submitting accounts or submitting accounts late raises serious concerns with the Commission and we now also know that three out of four charity donors would not give their money to a charity overdue on its accounts. Trustees should take heed of this.’
A separate study released this week from the Centre for Counter Fraud Studies and BDO estimates that fraud is costing the UK’s largest charities £1.65bn a year, and says improved measures could save about 40%, or £659m, of the total losses.
The report, Minimising Fraud and Maximising Results for Charitable Purposes, bases these calculations on the global average loss to charities per year through fraud of 5.47% applied to the 842 UK charities with annual incomes above £10m, which have a combined expenditure of £30.1bn.