According to recent research from regulator the Charity Commission, over half of charity accounts still fail to clearly explain how the charity is meeting its objectives. Moreover, a quarter do not meet even basic standards for users, with that figure rising to almost a half when considering only the smallest charities.
Andy Jones, director at Whitley Stimpson, leading chartered accountants and business advisors says: “Charities have many distinctive needs, often different to other types of businesses. They’ve faced unprecedented external challenges in recent years with the ever-changing legislation and regulation within the sector.”
The regulator analysed a random sample of 107 charity accounts against two criteria: how charities are reporting on the public benefit requirement, and whether the accounts meet readers’ needs.
It found that 54% of charities did not meet the public benefit reporting requirement. Of these, 13 failed the requirement as they did not describe the difference that their charity had made; 21 charities did not include the statement that they had complied with the public benefit requirements and read the Commission’s guidance, and 24 charities did not do either.
Andy continues: “This review clearly indicates that too many charities are missing out on an important opportunity to tell the public why their work matters, and what difference they are making. The most efficient way to improve the quality of a charities accounts and reports is to work with advisors like us; we have a passionate and dedicated team of specialists, with many years of experience of working with and advising charities and not for profit organisations, including many who are charity trustees themselves. Our aim is to work with our charity and not-for-profit clients to enable them to become more effective and efficient, so they can deliver even greater value to their beneficiaries.”
The Commission also examined whether the charities’ accounts met basic user need. While this work found that 75% of the accounts were of acceptable quality, 25% of charities did not meet the basic standard, for example because the accounts were inconsistent or not transparent.
Separately, the Commission scrutinised a random sample of 109 accounts of small charities with incomes of under £25,000 to examine their overall quality. This survey found that 55% were of an acceptable standard, only marginally higher than the 47% achieved in the previous two years.
The regulator found a range of reasons for some charities falling short of requirements; for example, five charities provided incomplete accounts that did not include information on their assets and liabilities.
Andy concludes: “Charities and not-for-profit organisations play a vital role in today’s society, delivering a diverse range of services and support to businesses, local communities and people in need. At Whitley Stimpson our qualified team will deliver a range of audit, financial reporting, accounting and advisory services to ensure charities understand and report effectively so they don’t become a negative statistic for the Charity Commison.”
Andy Jones has worked in the charity and education sector for over 20 years, advising a wide range of educational organisations, as well as local and regional charities.
Whitley Stimpson is one of the country’s leading independent accountancy firms, and has offices in Banbury, Bicester, Witney and High Wycombe. One of the top 100 accountancy companies in the country, their services cover general individual and business accounting and also a range of specialist sectors including charities.
For further advice, contact Andy and his team at Whitley Stimpson on 01295 270 200 or email@example.com.