Charity commission reminds charities with net current liabilities of the need for adequate disclosures in the Trustees’ Annual Report

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06 Aug, 2014

The Charity Commission has published the results of a review (“the review”) it carried out of the accounts of charities with net current liabilities. The review focused on the charities’ Trustees’ Annual Report and accounts and sought to assess disclosures made regarding the risks associated with the net current liability position and trustees’ responses to address them.

The Charity Commission identified 1,348 charities whose accounts reported a net current liability position and then randomly selected 98 of those for a more detailed follow up.  

The review identified that of the 98 accounts reviewed, 42 charities did not discuss the net current liabilities issue in the Trustees’ Annual Report.  The charity commission comments that these charities “missed the opportunity to explain their funding model, how the risk was being managed and how they planned to continue to operate”.

The Charity Commission has used the results of the review to remind trustees of charities with net current liabilities that “they should have a good understanding of their charity’s activities and its financial position, so that the financial risks can be identified and managed”.  It further comments that “trustees should use their Trustees’ Annual Report and accounts as an opportunity to reassure their funders, supporters and beneficiaries that they are actively managing the situation” and also reminds trustees that “communicating the financial position of a charity is a key requirement of the SORP”.

The press release and full report can be obtained from the Charity Commission website.

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