The three UK Charity regulators, the Charity Commission for England and Wales (CCEW), the Office of the Scottish Charity Regulator (OSCR) and the Charity Commission for Northern Ireland (CCNI) have issued new enhanced joint guidance setting out what auditors and independent examiners must report to them. The duty to report matters of material significance has been part of charities legislation across the three jurisdictions for a number of years and this update makes changes to and enhances previous guidance.
There are now nine matters which must be reported, if an auditor or independent examiner becomes aware of them during the course of their work. These are:
- matters suggesting dishonesty or fraud involving a significant loss of, or a material risk to, charitable funds or assets
- failure(s) of internal controls, including failure(s) in charity governance that resulted in, or could give rise to, a material loss or misappropriation of charitable funds, or which leads to significant charitable funds being put at major risk
- knowledge or suspicion that the charity or charitable funds including the charity’s bank account(s) have been used for money laundering or such funds are the proceeds of serious organised crime or that the charity is a conduit for criminal activity
- matters leading to the knowledge or suspicion that the charity, its trustees, employees or assets have been involved in or used to support terrorism or proscribed organisations within or outside of the UK
- evidence suggesting that the way the charity carries out its work relating to the care and welfare of beneficiaries, the charity’s beneficiaries have been or were put at significant risk of abuse or mistreatment
- single or recurring breaches of either a legislative requirement or of the charity’s trusts leading to material charitable funds being misapplied
- evidence suggesting a deliberate or significant breach of an order or direction made by a charity regulator
- on making a modified audit opinion, emphasis of matter, material uncertainty related to going concern, or issuing a qualified independent examiner’s report identifying matters of concern to which attention is drawn, notification of the nature of the issue with supporting reasons including notification of any subsequent trustee action
- evidence that significant conflicts of interest have not been managed appropriately by the trustees and/or related party transactions have not been fully disclosed as required.
The guidance makes the point that charity trustees should be aware of the matters which auditors and independent examiners must report and the duties placed on these advisers.
Guidance: goo.gl/uXQi7P
Updated 25 October 2017
This article features in our Charity Newsletter Autumn 2017. To see the full version please click here.
If you would like to find out more about any of the topics covered in our Charity Newsletter and how we at Robinson Reed Layton can assist, please contact our Charities Partner, Mark Williams, on 01872 276116 or mark.williams@rrlcornwall.co.uk. You can signup to receive our Charity Newsletter here.
This publication has been prepared by Robinson Reed Layton. It is to be treated as a general guide only and is not intended to be a comprehensive statement of the law or represent specific advice. No liability is accepted for the opinions it contains, or for any errors or omissions. All rights reserved.