Almost 40 per cent of small charities 'not providing correct information in financial returns'

A study by the Charity Commission says too many charities rely on people with inadequate knowledge to complete these documents

Almost 40 per cent of small charities are failing to provide correct financial information in their annual returns, the Charity Commission has found.

A sample of charities examined by the regulator showed that 38 per cent of those with annual incomes of less than £25,000 had provided inaccurate information to the commission.

It concluded that too many charities relied on people with insufficient knowledge of their organisation’s accounts to complete their annual returns.

A report on the exercise, published yesterday, says the commission examined the accounts of a sample of 106 charities with annual incomes of more than £25,000 and 110 with incomes of less than £25,000.

Although the regulator found a higher level of accuracy in the financial information provided by the charities in the sample with annual incomes of more than £500,000, not all the information was correct.

Among those charities, the commission found that only slightly more than 80 per cent of income and expenditure analyses were correct. But there was a 95 per cent accuracy rate for balance-sheet figures among these charities, the regulator said.

The regulator said that, for the larger charities, much of the incorrect information could be attributed to "input error", while there were no obvious reasons for the mistakes made in the returns from smaller charities.

Charities with annual incomes of less than £25,000 do not have to file their annual reports and accounts with the commission, unless they are charitable incorporated organisations.

But all charities must complete an annual return, confirming their income and expenditure over the previous year.

Nigel Davies, head of accountancy services at the Charity Commission, said: "Not providing accurate financial information is misleading and can have an impact on public trust.

"People want to know how charities spend their money, so this result is clearly not good enough."

The regulator last month published a new annual return, including questions on overseas funding, staff salaries and the safeguarding of children and vulnerable adults.

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