Our charities team regularly advises clients on good governance – a key part of this is maintaining accurate financial records, and always meeting filing deadlines with the relevant regulators. The following three examples of Charity Commission investigations into accounting anomalies provide a reminder to trustees of the critical importance of this.
When the Commission launches an investigation into a charity, there is inevitably unwelcome public attention generated and so these matters act as cautionary tales.
Forgotten Veterans UK
The Charity Commission has opened an investigation into Forgotten Veterans UK after an independent examiner was unable to find records accounting for £89,000 worth of expenditure and £151,000 worth of donations.
New Wineskins Charitable Trust
The Charity Commission has opened a statutory enquiry into New Wineskins Charitable Trust after the Trust’s failure to submit its annual accounts, annual returns and TAR for the financial years ending 31 March 2020 and 2021.
The Cowesby Trust
After an inquiry into The Cowesby Trust, the Charity Commission found that the sole remaining trustee of the charity had spent over £110,000 of charity funds on renovations of a cottage which he owned. The sole trustee had also spent £69,500 on two antique Mulberry longcase clocks which he claimed were an investment for the charity.
Each year the Charity Commission publishes a list of ‘double defaulter’ charities. This is a list of charities which have failed to submit the necessary financial information to the Charity Commission for two or more years. Charities are under a legal duty to file their annual reports, accounts, and returns.
Charities classed as a ‘double defaulter’ will show on the public record, with the information being available to the public, meaning there is a strong risk of deterring public support and potentially jeopardising fundraising campaigns.
Ensure compliance with accounting requirements for charities
Charity Commission Guidance CC8 provides guidance on the internal financial controls for charities as well as a checklist for charity trustees to follow.
By following this guidance, charity trustees can gain clarity on the best practice and requirements for accounting records. By doing so, trustees can avoid being placed on the double defaulter list, subsequently impacting public support of the charity.