UK charity regulators issue updated guidance on statutory reporting by auditors and independent examiners

By Christine Scott, Head of Charities & Pensions at ICAS

19 December 2017

New guidance for charity auditors and independent examiners on reporting matters of material significance has been issued.

The Office for the Scottish Charity Regulator (OSCR), the Charity Commission for England and Wales and the Charity Commission for Northern Ireland have issued joint guidance for charity auditors and independent examiners on reporting matters of material significance.

All auditors and independent examiners have a statutory duty to report matters of material significance to the appropriate charity regulator.  

The duty is underpinned by different legislation in each of the three charity law jurisdictions of the United Kingdom and is accompanied by a statutory right to report.  

Charity law, therefore, gives auditors and independent examiners legal protection against claims for breach of confidentiality.

The guidance sets out nine matters, including two new matters, which the regulators consider to be of material significance.  The two new matters are described in the guidance as follows:

  • If an auditor or independent examiner has concerns regarding a charity’s accounts and issues a modified audit report or qualified independent examiner’s report (matter 8).
  • Where an auditor or independent examiner has concerns that conflicts of interest or related party transactions have not been properly managed or declared (matter 9).

The risk of over reporting

ICAS is concerned that matter 8 will lead to over reporting which could obfuscate genuinely significant issues.  However, in their consultation report, the charity regulators state “We agreed that it is for [us] to determine whether there is a burden placed upon [us] in receiving these reports”.

ICAS responded to the charity regulators’ consultation which focused specifically on the matters to be reported in September 2016 and was therefore narrower in scope than the published guidance.

The guidance applies to matters to be reported after 1 May 2017 regardless of the accounting period under audit or examination.

Other reporting duties

Auditors fall within the UK’s anti-money laundering and counter terrorism financing (AMLCTF) reporting regime as do ICAS members who provide other accountancy-related services, including independent examinations, by way of business.  

Reporting to a UK charity regulator does not discharge an auditor or independent examiner from any statutory obligations under the AMLCTF regime.


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