Regulator Publishes Revised Financial Guidance for Charities

The Charity Commission, the independent regulator of charities in England and Wales, has  published four updated sets of financial guidance for charities and their advisers covering risk management; financial difficulties and insolvency; reserves and internal financial controls. The four sets of guidance are:

The guidance has been revised to reflect new developments and the challenging economic climate that charities now face. It covers the main points of financial management, planning and control in the context of charity law and good practice.

The Commission’s latest Economic Survey of Charities showed that 47% of charities thought the sector would feel the effects of the recession later than the private and public sectors, and take longer to recover. This guidance, available on the Commission’s website, is the latest in a number of steps taken by the Commission to support charities through the downturn and follows the publication of the ‘Big Board Talk’ - 15 questions all charities need to ask and our four Economic Surveys of Charities.

Andrew Hind, Chief Executive of the Charity Commission said:

"Careful management of risks, strong internal financial controls and a clear reserves policy form the cornerstone of a well managed charity. At a time when many charities are reviewing their financial and risk management, it is important that they have the right tools to be able to mitigate risk, overcome financial difficulties and to be clear about how to manage reserves and establish internal financial controls. In an uncertain economic climate, it is more important than ever for charities to review and actively manage the risks they face. Regardless of a charity’s size, this revised guidance is something for all trustees to read".

Updates include a new risk grid (Charities and Risk Management); guidance on controls over internet banking and safeguards against fraud and financial crime (Internal Financial Controls); a checklist of key questions for trustees to establish their charity’s financial position (Financial Difficulties and Insolvency) and guidance on setting reserves in the context of financial and risk management (Charities and Reserves).

The four new sets of guidance, Charities and Risk Management (CC26); Financial Difficulties and Insolvency (CC12); Charities and reserves (CC19) and Internal Financial Controls (CC8) supplement other information for charities about financial issues that can be found on the website at www.charitycommission.gov.uk.