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Charities materially misstate accounts

The Charity Commission expects trustees to take compliance with accounting requirements seriously.

It was not impressed with the 97 charities, with a collective income of almost £195 million, who filed accounts where their auditors stated that the accounts were or might be materially misstated.

The Commission identified that adverse opinions were given by auditors for the following reasons:

  • 2 charities were not going concerns
  • 45 were not compliant with the Charities Statement of Recommended Practice because:
    • 27 had incorrectly valued their property and investment assets
    • 11 had not included pension scheme liabilities in the accounts
    • 5 had not prepared group accounts when they were required to do so
    • 2 had incorrectly valued their stock or grant commitments
    • There was a lack of evidence in the accounting records to support the accounts in a further 50 charities.

The Commission has directed the charities concerned to address the issues raised by their auditors, reminding them that their accounts must be “accurate, transparent and complete to ensure that they do not misrepresent the charity’s financial circumstances and mislead existing and potential supporters, funders or beneficiaries”.

Wayne Thomas, charities partner at Bates Weston reminds clients that:

“As of 1 May 2017, auditors are required to report giving a modified audit opinion to the appropriate charity regulator as soon as possible. Bates Weston works with its clients to ensure that any issues regarding financial controls or gaps in accounting records are spotted and addressed as part of our ongoing relationship, minimising the chances that a modified audit report will be required.”

If you would like to speak to Wayne regarding our specialist charities audit service, please do contact him. 01332 365855 waynet@batesweston.co.uk.