Charities break the rules on expenses, finds Commission survey

Finance | Tania Mason | 24 May 2010

A random sample of charity accounts suggests there is "significant non-compliance" in relation to the disclosure of trustees’ expenses, according to the Charity Commission.

In the wake of the recent report by the Independent Expert Group on Expenses, which found that non-compliance with the Sorp in reporting trustees expenses could be as high as one in five charities, the Charity Commission decided to survey a selection of 175 variously-sized charities to see exactly what was happening in practice.

Ray Jones, the Commission’s head of accountancy, said results showed there is indeed "significant non-compliance in relation to the disclosure of trustees’ expenses" and that it is worse in smaller charities.

Overall, some 37 of the charities surveyed made no disclosures regarding trustees’ expenses at all.

Writing in Civil Society Finance this month, Jones outlined the "simple" requirements for the disclosure of trustees' expenses:

• The total amounts of expenses paid to trustees
• The number of trustees claiming expenses, and
• A brief description of the nature of the expenses claimed, eg travel, accommodation and subsistence.

"Given the simple nature of their disclosure it’s difficult to understand, particularly in the case of audited accounts, why so many trustees are getting this disclosure wrong."

Jones said the simple explanation for the "disappointing results" could be that charities that pay no expenses are failing to include a note to that effect. "However, unless such a statement is made then the reader of the accounts simply has no idea whether or not expenses are being paid.

"This is clearly a very unsatisfactory situation."

Jones reserved special criticism for auditors who are not sticking to the rules:

"In the case of charities which were audited, it seems that quite often auditors may be forgetting to use their checklists. This is simply not satisfactory. Finance professional employed by charities should really be aware of such basic disclosures.”

Read Ray Jones' article.

Directory: Charity Commission
Who's Who: Tania Mason

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