Independent examiners of charity accounts must look into whether the trustees of larger charities have made an assessment of their charity’s position as a going concern, new guidance from the Charity Commission says.
The regulator has today published an updated version of its CC32 guidance for independent examiners of charity accounts, which includes three new directions.
All charities with annual incomes of more than £25,000 must have some form of external scrutiny, with charities that have incomes of between £25,000 and £1m a year able to choose to have an independent examiner sign them off rather than pay for a more expensive audit.
All charitable companies and charities that are not companies with gross incomes of more than £250,000 in a year must prepare accruals accounts that are compliant with the Statement of Recommended Practice.
The commission today said the new measures, which went through consultation last year, were that independent examiners must check for any conflicts of interest that might prevent them from being independent and that examiners must check that any related-party transactions in "Sorp accounts" must be disclosed.
The third measure is that examiners must check whether the trustees have considered the charity’s financial circumstances when preparing accounts and, for Sorp accounts, whether trustees had made an assessment of the charity’s position as a going concern.
The changes were prompted in part by the collapse of Kids Company.
The guidance includes a new checklist to help independent examiners meet all the necessary requirements when carrying out their work, the regulator said.
Nigel Davies, head of accountancy services at the Charity Commission, said: "These new requirements and the more robust examination process will ensure that charities’ accounts are sufficiently scrutinised and that any regulatory concerns are identified as early as possible.
"It will also provide reassurance to trustees and the public that there is adequate oversight over charities’ finances."
The new guidance will be mandatory for independent examiner reports signed and dated on or after 1 December.