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Accountants should encourage charity transparency, says Dame Suzi

Finance | Niki May Young | 27 Sep 2010

Charity Commission chair Dame Suzi Leather has called on accountancy firms to encourage transparency in the charity sector.

Speaking at the annual Charities Day of the South Western Society of Chartered Accountants, Dame Suzi (pictured) said that “remembering the basics” of reporting finances would help to further increase public confidence in the sector following the Commission’s recent survey into public trust and confidence in charities.

While the survey revealed charities were the third most trusted groups in society after doctors and the police, it also showed that the most important factor now influencing peoples’ trust in charities is the proportion of charities’ income that goes to the end cause.

“Charities and their advisers will need to respond to increasing public scrutiny of their finances,” she said. “And that’s a particular challenge for you, as their accountants.

“These results demonstrate just how central the work you do for charities can be. It is your responsibility to help charities examine the way they report to the public about their spending. To help them redouble their efforts to be open, to be transparent, to be accountable. And that starts with the very basics, such as ensuring charities submit their annual returns and accounts to the Commission on time.”

Charities which do not return their annual accounts on time automatically receive a red mark beside their name on the website and this “could have a seriously detrimental effect on that charity’s public standing”, added Dame Suzi.  She advised that there are currently 9,055 charities with incomes of up to £25,000 whose latest documents are overdue.

Dame Suzi highlighted the recent negative coverage of street fundraisers as an aggravator for public unrest over charity spending and a heightened public interest in transparency.

"The charity sector has to do more to explain why it’s not realistic to expect all charities to spend the entirety of their income directly on their beneficiaries,” she said. “And to help people consider what ‘the end cause’ might mean: Is the cost of line rental for a charity operating a telephone helpline an administrative cost – or is it money spent on the end cause?"

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