Accounting body set to monitor finance controls in not-for-profit sector

Poor accounting practices and controls within charities can now be referred to the professional regulatory body, it has been announced.

It comes after the Charity Commission and the Association of Chartered Certified Accountants (ACCA) signed an information-sharing agreement.

Under the memoranda, the charity regulator can share details about finance professionals should they fail to meet the high standards expected of them.

The move comes as part of the accountancy and audit profession’s regulatory overhaul to boost the standard of financial reporting by charities after research revealed falling standards in the not-for-profit sector.

According to the reports, a large proportion of trustees fell foul of the rules relating to the reporting of related party transactions, while 25 per cent of charities with incomes over £1 million fell below the external scrutiny benchmark.

Commenting on the agreement, Nigel Davies, Head of Accountancy Services at the Charity Commission, said: “I am delighted that we now have this clear framework in place, which will help both the Commission and ACCA better serve the public interest by promoting high standards of accountancy practice in and for charities.

“We expect finance professionals working for charities to display both probity and high standards of professional expertise and competence. Sadly, some of our recent accountancy reviews indicate that some finance professionals are unaware of important changes to rules on accounting, the requirements for independent examination and some of the reporting duties for those examining or auditing in charities.”

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