Charity audit pressure grows

Charity audit pressure grows

Plans to reduce the time it takes charities to file accounts to seven months from year-end have added further fuel to the debate on auditing charities' accounts.

As the new concern emerged this week, calls were made for a wider debate on the whistleblowing responsibilities of auditors to the Charity Commission.

Michael Jellicoe, a small practitioner and registered auditor based in the West Midlands, claims that since many small charities adopt a 31 March year-end, shortening the filing time could further push auditors away from charity work due to the need to schedule numerous trustee meetings over the summer holiday period.

‘Those willing to take on the onerous work of charity accounts and audit I suspect will be cursing the day they did,’ says Jellicoe.

A spokesman for the ICAEW’s audit and assurance faculty said: ‘We want a proper debate with the Auditing Practices Board and the Charity Commission. We have the same goal: the effective auditing of charities.’

The debate stems from an update to guidance on auditing charities issued by the APB earlier this year. The consultation period has now ended but debate continues.

As previously revealed by Accountancy Age, auditors fear the low risk-to-reward ratio could force much of the profession to give up charity audit work.

Gerry Acher, a senior UK partner at KPMG, has warned the rise in charity regulation will increasingly place the onus on auditors.

But observers have dismissed concerns as an excuse for some larger firms to drop such work. Martyn Jones, vice chairman of the ICAEW audit and assurance faculty, said: ‘I don’t think profit is the issue, rather the unfairness of the apparent transfer of much of the regulator’s function together with a punitive regime.’

Added to the complex debate is the issue of the number of registered auditors which, according to the ICAEW, is dropping year-on-year, primarily due to the audit threshold hike.

Also piling the pressure on auditors is Opra, the Occupational Pensions Regulatory Authority, which has become proactive in informing accountancy institutes of auditors’ non-compliance, causing professional bodies to issue a growing number of fines.

The profession agrees the Opra experience has added to concerns over increased duties to the Charity Commission, but maintain the trend to raise red tape will adversely affect the quality of audit and safeguards on public money.

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