A quarter of charity trustees’ annual reports and accounts fail to meet the Charity Commission’s basic benchmark, the regulator has revealed, following its latest monitoring reviews.
The Commission studied a random sample of 106 charity trustees’ annual reports and accounts filed with it to assess how charities are meeting the public benefit reporting standards, and whether the accounts meet readers’ needs. It also inspected a separate sample of small charities.
Despite a modest improvement in the quality of public reporting, it found that for the sample of charities with incomes over £25,000, 74% of the trustees’ annual reports and accounts reviewed were of acceptable quality, meeting its basic benchmark standard. The most common reason for inadequate reporting was that the trustees’ annual report did not explain the charitable activities the charity had carried out to help its beneficiaries.
Reasons for inadequate reporting:
- The annual report was inadequate, mainly because it provided little or no information on the charitable activities carried out (11% of charities)
- One of the required documents was missing (5% of charities)
- The independent scrutiny report was inadequate, mainly because the wording of the report demonstrated that the person carrying out the scrutiny was not familiar with the independent examination requirements (5% of charities)
- The accounts were inadequate, mainly because they were incomplete or did not balance (5% of charities)
For the small charities, the Commission found that 64% met the regulator’s basic benchmark. The main reason for inadequate reporting here was that the charity failed to provide one or both of the trustees’ annual report and the accounts.
The Commission has provided regulatory guidance to 89 charities included in the reviews to help improve the quality of future trustees’ annual reports and accounts.
Nigel Davies, Head of Accountancy Services at the Charity Commission for England and Wales said:
“Our research into trust and confidence in charities shows that the public no longer give charities the benefit of the doubt; they want evidence that charities make a difference when using their money. Public reporting is an opportunity for charities to tell their story and explain to the public what they do and how they use charitable funds.
“Too many charities are still not meeting very basic standards when it comes to making key information available to the public. I am encouraged to see that an increasing number of trustees recognise the value of public benefit reporting, but there is clearly more work to be done across the sector.”
The full reports are available on GOV.UK.