Charity regulators urge vigilance over 'incorrect' coronavirus spending

UK charity regulators have warned independent examiners to be vigilant for charities misusing funds during the coronavirus pandemic. Independent examiners can review charity accounts instead of auditors, where a charity has an income of £250,000 a year or less.

The new guidance issued jointly by the Charity Commission for England and Wales, OSCR the Scottish Charity Regulator and the Charity Commission for Northern Ireland last week, acknowledges that charities will face additional demands caused by the coronavirus crisis, and advises examiners to “take care to ensure that charities are not incorrectly spending restricted funding”.

It says: “In times of financial need charities may find it difficult to meet expenditure from their unrestricted funding streams. Whilst we understand that charities are under pressure to meet their financial obligations, restricted funds should not be used to meet general expenditure.

“Examiners should take care to ensure that charities are not incorrectly spending restricted funding.”

Charitable purpose

The guidance also says that examiners “must pay particular attention” to whether activities intended to address the impact of the pandemic have led organisations to act beyond their charitable purpose.

The Commission suggests that, if organisations seem to have worked outside their charitable purpose, examiners check whether consent was obtained from a donor or the regulator.

Records and meetings

The guidance also reminds examiners to consider the practical implications of the pandemic in accessing the information they need from charities.

This includes the records held by charities. The Commission says that they may need to rely more heavily on digital records, given that charity offices may be closed or out of bounds, and allow for any additional time needed to access them.

Similarly, it may not be possible to meet in-person with charity managers, so examiners are advised to consider the different ways they can obtain information from key personnel to complete their work.

Pragmatic

Nigel Davies, the assistant director of accountancy services at the Charity Commission, said: “We hope this new guidance will support independent examiners. It provides practical advice on how they can continue to carry out their important role reviewing charity accounts during the ongoing crisis.

“This guidance is part of the pragmatic regulatory approach we committed to from the start of the pandemic. We hope the advice will also be useful to trustees in helping the examiner undertake their work.”

See more at: 

https://www.civilsociety.co.uk/news/charity-commission-urges-vigilance-over-incorrect-coronavirus-spending.html#sthash.7clhB3R8.dpuf  

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