Auditors raise concerns about 80 large charity accounts

16 Mar 2018 News

Some 80 charities submitted accounts containing a warning from their auditor that the accounts could mislead the public, according to a report published by the Charity Commission.

The Charity Commission has today published an analysis of the 80 large charities’ accounts which were filed with a modified audit opinion, meaning that they could be materially misstated, for the year ending December 2017.

Some 68 of these included a qualified opinion, 11 had disclaimers of opinion and in one case auditors gave an adverse opinion, which means the auditor disagreed with the charity’s claim that it is a going concern.

For 48 charities, there was a lack of evidence to support the figures in the accounts. While in 45 cases there was “material non-compliance with the SORP”.

Fewer than previous year

Charities with incomes over £1m must get their annual accounts audited. In May 2017 a requirement for auditors to report when they have given a modified audit opinion as soon as possible came into force.

Fewer charities filed accounts with modified audit opinions in 2017 than the previous year when 97 did – but the combined income of those that did was higher, £202m up from £195m.

Some 29 of the charities that submitted accounts in 2016 that contained a modified opinion did so again with their following year’s accounts.

Underlying failings

The underlying failings identified were similar to those outlined in the Commission’s report last year on the modified opinions submitted in 2016. These were that the trustees had:

  • not kept adequate records of the charity’s transactions or assets and liabilities
  • appointed a new auditor and the auditor had not attended the year end stock count or been provided with sufficient evidence to support the previous year’s closing balances
  • not obtained the professional valuations of properties, investments or pension liabilities required by the SORP

A Charity Commission spokesperson said: “We do welcome that it appears fewer charities are filing their accounts with modified audit opinions, however the public rightly expects all charities to file accounts that are accurate, give a true and fair view, and comply with the accounting framework.

"Where auditors have reservations or concerns about a set of accounts they have reviewed, it is important that the trustees pay careful attention to remedying the issue.”

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