In a report on the progress made since the NAO heavily criticised the regulator in 2013, published today, the spending watchdog says the commission has improved significantly.
The report says the regulator has made good progress on digital transformation, has sped up its registration processes and its board has become more strategic, but adds "it is important that it continues on this trajectory".
The NAO’s report says the link between the commission’s key performance indicators and statutory objectives has improved, although reporting could be better, and its approach to managing change is also better.
It says the commission is "embracing a risk-based approach, but legacy systems and lack of usable data are barriers to improvement".
The report says the regulator is making use of the new powers granted by parliament last year, but needs to manage the risk that its powers will not be sufficient in the future.
"The commission used its new powers 50 times since May 2016 without challenge," the report says.
"After initial slow progress, the commission is now seeing a reduction in the length and number of old inquiry cases. However, the commission does not have tested, systematic ways of identifying what powers it needs and whether its current powers continue to be sufficient as the risks of abuse by charities and non-compliance with charity regulations change."
A report by the NAO published in December 2013 concluded that the commission was failing to regulate charities effectively and was not providing value for money.
The 2013 report said the regulator did not do enough to deal with abuse of charitable status, failed to take tough enough action when there were serious regulatory cases involving charities and could be slow to act when investigating regulatory concerns.
A follow-up report by the NAO in 2015 found that the commission had made good early progress in addressing criticisms of its performance, but still faced significant challenges in areas such as digital transformation, understanding the costs of being an effective regulator and managing stakeholders’ expectations.
Today’s report says it is vital that the regulator maintains the momentum of change and embeds a culture of continuous improvement.
"The commission has more to do in planning for an uncertain and dynamic future," it says.
"The focus on improving internal structures and processes, although important in moving on from the 2013 position, will need to be complemented by further collaboration and external engagement. This will support future discussions on funding and will give the commission more influence over its own agenda."
The commission said it expected the report would end the NAO’s formal engagement with the commission since 2013.
William Shawcross, outgoing chair of the Charity Commission, said the report recognised the "huge strides" the regulator had made.
"There is still work to be done but, as my time at the commission comes towards an end, we can rightly be proud of the transformation we have gone through," he said. "Huge credit must be given to our incredible staff, who have been central to this throughout."