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Trustees Must Always Act in the Interests of Their Charity & Not For Private Benefit

by Aug 29, 2019

The Charity Commission has restated its guidance about ‘related-parties transactions’, payments to people closely connected to trustees, after finding two-thirds of charities with <£1m turnover failing to report about it, even if there were no payments. Their concern is further noted by the number of enquiries about serious incidents the Commission undertakes and continuing concern from the public about charities’ trustworthiness.

Charity trustees should welcome and note that the Commission is tightening-up requirements around external scrutiny of your charity’s accounts.

You’ll already know that your accounts have to state whether your trustees have received remuneration for their roles, as well as whether and how much reimbursement they have received for any expenses claims. You’ll know that often trustees don’t claim expenses but your accounts must still state NIL if that’s the case.

Where your externally-scrutinised Accounts are subject to the SORP, the Statement of Recommended Practice (all Charitable Companies, CIOs & unincorporated charities with more than £250k income p.a.), your Accounts must also add a statement about transactions with any parties connected or related to your trustees.

If there are no transactions with anyone connected or related to your trustees, you must state those NIL transactions, as for remuneration and expenses, above.

The Commission raised further concerns that Independent Examiners or Auditors of your charity’s accounts had not ensured those accounts showed such ‘NIL related-party transactions’ and they have contacted all Accountancy and Audit Bodies to remind their Members about these omissions. The Commission has now set a benchmark for the quality of that external scrutiny, be it Independent Examination or full Audit of your accounts.