We are sharing this update from ACCA, our professional body, for the interest of clients and contacts. The content is (c) ACCA
The Charity Commission has been conducting reviews
With the charity sector facing ongoing financial stress due to the effects of the pandemic, the risks posed by cyberfraud and the challenges of operating in the current climate facing charities, auditors continue to have an important role to play in the regulatory oversight of the charity sector.
Auditors, trustees and independent examiners should be aware of guidance from the Charity Commission and remember that they need to report on any matters of material significance.
The Charity Commission has been conducting reviews of the reporting of matters of material significance. This has included checking all independent examination reports or audit opinions signed on or after 1 May 2020 that contain a qualification, modified opinion or other reporting paragraph, to confirm that a report of a matter of material significance has also been promptly filed with the commission in accordance with issued guidance.
The Charity Commission’s guidance includes a list of reportable matters and states that a matter becomes reportable as soon as:
- the auditor or independent examiner becomes aware of it; or
- the auditor or independent examiner intends to offer a modified audit opinion, an audit opinion with an emphasis of matter or material uncertainty regarding going concern; or
- a qualified independent examination report identifies one or more concerns about the charity’s accounts.
The list is not conclusive and therefore auditors and independent examiners must apply professional judgement where other matters emerge.
Auditors and independent examiners must ensure that they are fully familiar with the guidance and their statutory obligations in relation to charity reporting. The Charity Commission expects that where there are doubts about a matter, it should be reported.
This is especially significant as the commission has stated that, where auditors or independent examiners fail to make a report regarding a matter of material significance, the commission will report this directly to professional bodies as a formal complaint. They will no longer contact auditors or independent examiners to ask why a report wasn’t made.