Understandability and Transparency of the Financial Statements of ...

examiners and the Charities‟ Board which was discussed in Chapter Two (section 2.6).
Each mechanism will be analysed here in terms of its impact on accountability.
5.4.2.1 Charities Regulatory Bodies
In England and Wales the Charity Commission has a specific function to:
identify and investigate apparent misconduct or mismanagement in the
administration of charities, and to take appropriate remedial or protective
action (Charity Commission, 2009a, p. 3).
They consider that an important part of monitoring is to raise awareness of compliance
requirements and risks that charities need to guard against (Charity Commission,
2009a). However, the Charity Commission considers that they have inadequate
resources to regularly review all the charity accounts they receive, thus if there is no
specific complaint that triggers investigation it is possible for charities to submit very
poor financial statements (Morgan, 2009b).
While the Charity Commission has been around for over one hundred years their
„Compliance Monitoring Unit‟ only became fully operational since 2008. Its
establishment was in answer to the increasing concern over the need for greater
oversight of charities. As highlighted in Chapter Two (section 2.6.1) the Charity
Commission publishes an overview of the themes and lessons learnt from their
monitoring since the unit was started, as they consider this raises awareness of the risks
facing charities (Charity Commission, 2008b, 2009a, 2010e). It is interesting that
Scotland‟s recently established Office of the Scottish Charity Regulator (OSCR) is
proposing to allocate considerable resources to reviewing accounts and conducting
investigations (Morgan, 2009b). This may lead to an increase of emphasis in England
and Wales which could see the monitoring unit increase from their current eight staff
members (Charity Commission, 2009a).
The Charity Commission uses a variety of methods to monitor or investigate „regulatory
compliance cases‟ and „statutory inquiries‟ (Charity Commission, 2010a, 2010f). The
Charity Commission also rely on charities‟ trustees to report serious incidents within
their charities and in the 2008-2009 year the Charity Commission received reports of
two hundred and sixty-one serious incidents, of which 54% related to fraud (Charity
Commission, 2009a).
With regards to regulatory cases, the Charity Commission publishes the reports if there
is significant public interest in the issues involved and when there are lessons that other
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