A call to action to auditors with Charity clients: Stop recommending abridged accounts

With a direct link between trust and transparency we want to get to the bottom of why some charity Trustees are choosing to file abridged accounts.

according to benefacts the numbers of charities choosing abridged accounts has jumped from 24% in 2016 to 32% in 2017. 

One of the three elements of the Charities Institute Ireland Triple Lock is a commitment to Charity SORP (Statement of Recommended Practice). Charity SORP is the gold standard of financial reporting because it requires a greater level of information and disclosure to funders, donors, beneficiaries and the general public. It includes a description of the principle risks the charity faces and how it manages them, it explains the policy for holding reserves and explains how it remunerates its executive team.

In the charity sector transparency and trust are inextricably linked. The charities who produce SORP accounts understand this. So, when a charity chooses to file abridged accounts they are doing the opposite, they are providing the minimum information required of them.

Over half  (53%) of Charities Institute Ireland members are already SORP compliant and the remainder are committed to adopting Charity SORP in the next 2 years.

The Benefacts article asks,why are we seeing an increase in abridged accounts when we know the public want more information? In our opinion one of the reasons is the advice charities are receiving from some auditors. We have had a number of charities tell us that their auditors are recommending they avoid Charity SORP on the grounds that it is costly, time consuming and not yet necessary (while SORP is mandatory for charities in Scotland, England and Wales it still remains optional here in Ireland).

it is time for auditors to stop giving clients a list of reasons why charities sorp isn’t necessary and start actively promoting it as the industry standard in financial reporting for their charity clients.

Charities Institute Ireland is compiling a register of auditors committed to Charities SORP for charity clients regardless of size and income. We will promote this list on our website.

For more information on SORP this is an interesting article