Charity Commission investigates after Accountants Report

Feb 5, 2020
Author: Simon Bladen
Simon is one of the firm's Audit Partners. Simon is responsible for looking after the firm’s legal, charitable and not-for-profit clients.
Charity Commission investigates

Charity Commission investigates after Accountants Report

Yet another Charity has hit the headlines for alleged mismanagement. This time a Devon based charity has been reported by their accountant to the Charity Commission following an Independent Examination for failure to keep proper accounting records.

Keeping proper accounting records is a legal requirement for charities and failure to do so can lead to severe punishments; recent cases have seen charities being struck off, their bank accounts frozen and the whole Board of Trustees being replaced.

In this particular case the charity dealt mainly in cash and had no documentation to evidence where the £55,505 of donations received had originated from and insufficient documentation for some cash expenditure.

The Charity Commission continues to investigate this case but in another recent case made their position very clear. Amy Spiller, head of investigations team at the Charity Commission, said: ‘Trustees are under an obligation to act in the best interests of their charity –by handling donations with care and stewarding funds towards the good cause they serve.’

This incident yet again highlights the importance of good record keeping and having strong financial controls in place in the charity sector.

This comes as the National Council for Voluntary Organisations issues a warning about cyber security and controls around IT systems. Due to cost burdens some charitable organisations use older software which may be more susceptible to cyber-attack.

Furthermore, email fraud is become more sophisticated, meaning that robust controls around authorisation of banking payments are more important than ever before. Action Fraud reported that there were 1,057 reports of fraud totalling £7.85m in the year to March 2019 that specifically affected charitable organisations.

The measures suggested by the NCVO include:

·         Updating software regularly

·         Strong password policies

·         Having up to date malware protection

·         Staff training

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Simon Bladen