A significant number of charity accounts fail to explain how the charity is meeting its objectives, while many do not meet basic standards for users, particularly in the very smallest charities, according to research from the Charity Commission.
Of a recent sample, 54% of charities did not meet the public benefit reporting requirement. Some did not describe the difference that their charity had made and others did not include the statement that they had complied with the public benefit requirements and read the Commission’s guidance.
The Charity Commission examined whether the charities’ accounts meet basic user needs, based on a range of criteria, including whether the annual report explains the activities the charity had carried out during the year to meet its purposes and whether the accounts had been appropriately scrutinised in an audit or independent examination.
The review found that 75% of the accounts inspected were of acceptable quality, however, 25% of charities did not meet the basic standard, because the accounts were inconsistent or not transparent.
The Commission says it will be using opportunities, such as its quarterly newsletter, to share the key lessons arising from its accounts scrutiny work with other charities.
The Charity Commission reports on Accounts monitoring: ‘Do charity annual reports and accounts meet the reader’s needs?’ can be read here.