Watchdog ‘Shows its Teeth’ in Crackdown on Poor Practices, Charities Warned

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Charities and voluntary organisations across the Liverpool city region have been warned the Charity Commission is now “showing its teeth’ following a number of high-profile scandals such as Kids Company and Oxfam.

That was the clear message from experts at the Spring Charity Update seminar held by accountancy firm BWM in Liverpool city centre. Many of BWM’s clients are in the charity sector and the practice offers regular update events.

Pressure is building

Managing partner Peter Taaffe opened the session at Ziferblat at No 4 St Paul’s Square and talked about Kids Company, a high-profile youth charity in London, that had collapsed following allegations of financial mismanagement involving millions of pounds.

Mr Taaffe said it was the responsibility of both charity trustees and their professional advisors to report on what the Charity Commission calls “serious incidents” or “matters of material significance”.

He explained: “Post-Kids Company there has been far more focus on what needs reporting to the Charity Commission.

“The Commission recently brought out a report on this and in it they identified that of 114 auditors who gave audit opinions containing information they were required to report to the regulator, only 28 contacted the Commission. And of these 28 only 6 did so promptly – 3 waited more than two months to alert the Commission!”

“As accountants we have a legal responsibility to report such matters. The pressure on this from the Charity Commission is building – they are now showing their teeth.”

Loss of funding

Another speaker at the seminar was Jenny Hampson, a partner at Knights Professional Services, who talked about how the recent Oxfam and Presidents Club scandals had implications for the whole of the charity sector.

She explained: “The story broke how staff at the Oxfam had paid vulnerable women for sex following an earthquake in Haiti. On the surface they did the right things – they held an investigation and a number of staff were sacked.

“However, they were not entirely open with the Charity Commission and in the resultant public fall-out they lost a lot of funding. In the first few days along more than 7,000 individual donors cancelled their direct debits.

“Safeguarding people has to be a key governance priority and the message from what happened at Oxfam is ‘don’t bury your head in the sand.”

Ms Hampson also talked about the Presidents Club which held a now scrapped annual charity fundraising dinner attended by wealthy individuals. There was a media storm following allegations of inappropriate sexual conduct on the night.

A number of charities talked about handing back donations and Ms Hampson warned any charity considering returning donations may need the consent of the Charity Commission if the sum involved was £1,000 or more.

Digital dangers

Troy Johnson, from Liverpool insurance brokerage Griffith & Armour, talked about compliance with the new GDPR data protection legislation coming into force in May and the dangers of data breaches.

Although malicious attacks using ransomware were becoming more common, he said, a data breach could be as simple as someone mistakenly sending an email to the wrong recipient. One in four companies had suffered data breaches, he added.

“Resilience and diligence are the most important things here – you won’t be able to stop data breaches so you need to make sure you are ready when they happen,” he said.

“Make sure you educate your staff and trustees on GDPR and digital risks. Be ahead of the curve and make sure people are trained so they know what their responsibilities are.”

Also addressing the seminar was Tommy Davies from IT Answers, who spoke about the benefits of cloud computing and how it could save charities money and help with compliance.
For further information about the seminar topics please contact Vicki Harper