Compliance actions for failed accounts consultation - NICVA's response

Currently when a charity submits its annual monitoring return (AMR) along with its annual accounts, report and examiner’s report, the ‘status’ displays that the charity is ‘Up-to-date’.

Why is the Commission doing this?

The Commission is concerned that this may wrongly give the impression that the charity’s accounts have been checked by the Commission when in fact all it means is that the charity has submitted its accounts and reporting information on time.

The Commission has highlighted that it is not possible for it to check all charities' accounts and reports that are on the charity register and believes that its new proposals should promote both compliance and transparency. 

What are the proposals?

The Commission is proposing to include status markers on the charity register to make it clear which accounts the Commission has and has not checked. For those charities which the Commission checks, it proposes to state whether they are compliant or not. It is proposing the following status markers:

• Not checked
• Date checked
• Failed

The Commission has highlighted that it will only use the Failed status marker if the charity has ignored the Commission’s regulatory guidance and failed to re-submit a legally compliant AMR.  It will liaise with the charity in the first instance, when it identifies areas of significant concern with the reporting information, and request that compliant accounts and reports be re-submitted within a specific and reasonable timescale. 

If the charity engages with this process and complies it will not be marked as failed. The Failed Status will only apply to those charities that have failed to comply with regulatory guidance issued by the Commission in relation to a failed basic compliance check on their accounts and report.

Where the Commission identifies minor issues, eg a non-critical element of the trustees’ annual report, it will issue ‘self-regulatory’ guidance.  The charity will not be expected to resubmit the reporting documents for that period but will need to ensure that it does not make the same mistake in the following years. 

There are no plans to change the status of charities which fail to submit their accounts and reports on time.  They will continue to be marked either ‘In default’ or ‘Due documents received late’. 

NICVA’s comments

NICVA understands that the current ‘Up-to-date’ status on the charity register could be misunderstood to mean that the charity is up-to-date with all its compliance requirements. We also understand that the Commission can only sample a small percentage of annual accounts and reports to check for compliance with charity regulations. 

NICVA believes that if the Commission is going to include new status markers, then it should not include the three markers as proposed.  The ‘not checked’ status could have negative connotations and it could be interpreted as a failing of the charity.  It could also be perceived that ‘not checked’ means not externally scrutinised.  NICVA proposes that that word ‘Submitted’ ‘or ‘Received’ be used instead of ‘not checked’.

NICVA trusts that it is very helpful to charities when the Commission issues either self-regulatory or regulatory guidance (depending on the errors uncovered) and believes that the Commission is being proportionate in its approach here. 

We recommend that a charity’s status would only be marked as failed if all the trustees have been contacted in advance to alert them of this course of action to give them the opportunity to put it right.  We also believe that the Failed status should only be used where the charity has been given enough time to respond to the Commission.   We would also suggest using Helper Groups to see if they can help the charity comply with the regulations before they are marked as Failed. 

There was a suggestion that ‘re-submission required’ status be used instead of ‘Failed’.

For charities that have received self-regulatory guidance, the Commission proposes that their status would be marked as ‘Date Checked’.  While this is fine in principle, the danger is that other charities will look to the register to find charities that the Commission has checked and copy the format of these accounts and reports.  To avoid duplication of errors, we think that it would be useful to have the status of these charities marked as ‘Received. Guidance issued’.

NICVA agrees that the Commission will include information buttons to explain each of the status markers. 

NICVA believes that it would be useful if the Commission were to publicise a list of all the minor issues that would result in self-regulatory guidance being issued and a list of issues that would result in regulated guidance being issued.  

Submit your response

NICVA would welcome your comments to help formulate our response to the Commission by 12 PM on Tuesday 20 November.  The Commission would also welcome your comments on its proposals by 5pm on Wednesday 21 November. 

For more information please see the consultation document which can be downloaded from www.charitycommissionni.org.uk/about-us/public-consultations/current-consultations/