Accounts monitoring: Charities with audit reports identifying that they may be in financial difficulty
Reports of Charity Commission accounts monitoring reviews.
Charities at risk of financial difficulty - proactive review
The Charity Commission’s objectives include to ensure trustees comply with their duties and to increase public trust and confidence in charities. The closure of a number of charities in recent months has highlighted the importance of trustees managing financial difficulties well, the public interest in charities (particularly high profile charities) that collapse due to financial difficulties and the negative impact this can have on public trust and confidence in charities more widely.
In response, the commission:
carried out a proactive scrutiny and review of various charity accounts that signal they may be in financial difficulty
The 2 reports contain details of wider lessons for trustees of other charities. We would also encourage trustees to refer to the commission’s range of financial guidance:
Managing a charity’s finances: planning, managing difficulties and insolvency (CC12) provides advice for charities that are facing financial difficulties and how they can reduce the risk of insolvency
Collaborative working and mergers: an introduction (CC34) provides information about the factors you need to think about when working in partnership or merging with other organisations - charities that work together can operate more efficiently, deliver better services and save money
Charity reserves: building resilience (CC19) provides a guide to what charities need to consider when thinking about the levels of reserves they hold and describes what to think about when drafting a reserves policy
Managing charity assets and resources (CC25) provides advice on how to manage charity assets and resources, including cash and investments, staff and volunteers
Internal financial controls for charities (CC8) provides guidance on managing a charity’s financial activity and using internal controls to reduce the risk of loss
Trustees can also use Charity governance, finance and resilience: 15 questions trustees should ask as a helpful starting point to consider the health of their charity