Charity auditors’ initial responses to new reporting rules have been ‘disappointing’ and have raised ‘serious concerns’, Charity Commission CEO Helen Stephenson has said.
Speaking at the ICAEW Charity Conference last week, Stephenson said the updated guidance for auditors, published by the Commission following the collapse of Kids Co, which encourage charity auditors’ to flag matters of material significance in their audit reports, have been “just not good enough”.
Following the collapse of Kids Company, the Charity Commission updated its guidance to auditors, extending the list of reportable matters and encouraging charity auditors to alert the Commission to matters of material significance to prevent instances like this reoccurring.
However, Stephenson said: "We were disappointed when we tested compliance with the new rules. We found fewer than one in four auditors alerted us to matters of material significance identified in their audit reports.
“Of 114 auditors who gave us audit opinions, containing information they were required to report to us in the six months to October 2017, only 28 did so. To be frank, this is just not good enough.
“In fact, it’s a serious concern to us and we’ve been working in partnership with the ICAEW and others to raise awareness of this new compliance,” she added.
The Charity Commission CEO, who has been in post for a year, explained that rebuilding public trust “does not begin and end with explaining ourselves to the public, as important as that is”.
She explained it also requires charities to adhere to “high standards of conduct and behaviour in the first place”, which means being “true to the purpose and mission, ethos and values” of each charity.
“Finance professionals play a crucial role in that respect, both in their role of driving strategies within charities, ensuring a tight focus on mission and rigorous management as auditors and examiners of charities.”