On 12 April the Charity Commission issued revised guidance for auditors and independent examiners and added two new ‘matters of material significance’ to the list of matters that require to be reported to the Commission under sections 156 and 159 of the Charities Act 2011.
The revised list applies to audits/examinations being conducted or reported after 1 May 2017, irrespective of the charity year end date.
Existing reportable matters which remain reportable are:
- Dishonesty or fraud
- Failure in internal controls
- Money laundering & criminal activity
- Support of terrorism
- Risks to the charity’s beneficiaries
- Breaches of law or the charity’s trusts
- Breach of an order made by the charity regulator
The two new reportable matters are
- Modified audit opinion or qualified independent examination report
- Non-management of conflicts of interest and non-disclosure of related party transactions
Auditors/examiners only have to report matters they come across as part of their audit/ examination and do not need to specifically look for matters to report. It’s worth noting however that in this respect ‘material’ is not just the financial measure familiar to auditors/examiners, but also includes any matters that is of material significance to the Charity Commission in their role of regulator.
These requirements are in addition to any specific requirements required by the Charity Commission Directions for Independent Examiners (which have also been reviewed and new Directions are expected in summer 2017); requirements placed on auditors under the clarified International Standards on Auditing; and for both under the Proceeds of Crime Act 2002, the Bribery Act 2010 and the Terrorism Act 2000.
More information is available on the Charity Commission website for both trustees and auditors/examiners www.charity-commission.gov.uk
To discuss this with our Head of Not For Profit team, Nicola Ferriday, you can call the office on 01923 224411 or email Nicola at nicola.ferriday@myersclark.co.uk