Public Sector Finance

The Auditing Practices Board has recently issued a number of practice notes which provide guidance for auditors when carrying out specialised audits, particularly at organisations in regulated sectors.

One of these practice notes is PN 11 – The Audit of Charities. A consultation draft with a view to revise this guidance, applicable in the United Kingdom, was published in July.

The comment period is due to end on 28 September this year.

The original version of PN 11 was issued back in 1996, and there have been a number of developments since then which have led to the revisions.

Some of these developments include; the Charities SORP – Accounting and Reporting by Charities reissued by the Charity Commission in October 2000; FRS 18, which changes the status of SORPs and bulletins 1999/6 and 2001/2.

The revised practice note has been updated to reflect these various issues.

One matter of particular interest regards the revision of the charity SORP. The SORP now requires the trustees’ report to include ‘a statement confirming that the major risks to which the charity is exposed, as identified by the trustees, have been reviewed and systems have been established to mitigate these risks’.

The guidance states that auditors should read this statement in accordance with SAS 160, and new wording for insertion in the auditors’ report and a new paragraph in the example engagement letter are also included.

It is important for auditors of unincorporated registered charities to note that they are required by charities’ regulations to tell the Charity Commission certain matters of which they become aware in their capacity as auditors of a charity.

The section in the practice note covering SAS 620 has been adjusted, hopefully with the result of clarifying auditors’ responsibilities in this area.

The practice note also includes a new appendix setting out examples to be reported to the Charity Commission.

Whistleblowing requirements do not apply in the case of charitable companies, Scottish or Northern Irish charities or exempt charities.

To cover such situations the revised practice note gives guidance on making reports to an appropriate authority.

The APB’s website is at

Jon Grant, technical director at the Auditing Practices Board

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