Regulators issue new guidance calling on auditors to do more

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Regulators issue new guidance calling on auditors to do more

The three UK charity regulators have published new guidance calling on auditors to be more proactive in reporting concerns, in response to a parliamentary report into Kids Company which criticised the charity audit process.

The Charity Commission for England and Wales, the Scottish Charity Regulator, OSCR, and the Charity Commission for Northern Ireland have produced a joint publication Reporting of relevant matters of interest to UK charity regulators. The publication advocates a ‘when in doubt, report it’ approach, and includes examples of relevant matters which may be reported.

The guidance provides examples of the matters that may be reported to the charity regulators, which differs from the separate guidance of matters that must be reported as a legal duty.

The publication follows last year’s Public Administration and Constitutional Affairs Committee report on Kids Company.  Nigel Davies, head of accountancy services at the Charity Commission for England and Wales, said the report showed that "auditors have been too reticent when it comes to reporting matters of concern that would be of interest to the regulator". 

He said: “Through this new publication we are encouraging and enabling the profession to step up and engage with us more readily on a proactive basis.”

Examples of relevant matters that should be reported include insecure funding putting beneficiaries at risk; a donation that may indicate vulnerability to abuse, and lack of financial oversight by the whole trustee body.

 

The regulators said that there is no requirement for auditors or independent examiners to undertake any additional audit or examination work to identify relevant matters for reporting. The matters that are reported will be those identified ‘during the course of an audit or independent examination.

Myles McKeown, head of compliance and enquiries at Charity Commission for Northern Ireland, said: “With over 200,000 registered charities operating across the UK we as regulators cannot possibly upturn every stone, and so auditors and independent examiners have an incredibly important role to play in helping us regulate effectively.”

Laura Anderson, head of professional advice and intelligence at OSCR, said: “This document is a collaborative initiative between UK regulators. This joined-up approach to guidance has enabled us to provide the most consistent and comprehensive insights on areas we encourage auditors to report to us, drawing on UK-wide experience across the sector.”

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