• Current students
      • Student centre
        Enrol on a course/exam
        My enrolments
        Exam results
        Mock exams
        Learning Hub data privacy policy
      • Course information
        Students FAQs
        Student induction
        Course enrolment information
        F2f student events
        Key dates
        Book distribution
        Timetables
        FAE elective information
      • Exams
        CAP1 exam
        E-assessment information
        CAP2 exam
        FAE exam
        Access support/reasonable accommodation
        Extenuating circumstances
        Timetables for exams & interim assessments
        Interim assessments past papers & E-Assessment mock solutions
        Committee reports & sample papers
        Information and appeals scheme
        JIEB: NI Insolvency Qualification
      • CA Diary resources
        Mentors: Getting started on the CA Diary
        CA Diary for Flexible Route FAQs
      • Admission to membership
        Joining as a reciprocal member
        Admission to Membership Ceremonies
        Admissions FAQs
      • Support & services
        Recruitment to and transferring of training contracts
        CASSI
        Student supports and wellbeing
        Audit qualification
        Diversity and Inclusion Committee
    • Students

      View all the services available for students of the Institute

      Read More
  • Becoming a student
      • About Chartered Accountancy
        The Chartered difference
        What do Chartered Accountants do?
        5 reasons to become a Chartered Accountant
        Student benefits
        School Bootcamp
        Third Level Hub
        Study in Northern Ireland
        Events
        Blogs
        About our course
        Member testimonials 2022
        Become a Chartered Accountant podcast series
      • Entry routes
        College
        Working
        Accounting Technicians
        School leavers
        Member of another body
        International student
        Flexible Route
        Training Contract
      • Course description
        CAP1
        CAP2
        FAE
        Our education offering
      • Apply
        How to apply
        Exemptions guide
        Fees & payment options
        External students
      • Training vacancies
        Training vacancies search
        Training firms list
        Large training firms
        Milkround
        Recruitment to and transferring of training contract
        Interview preparation and advice
        The rewards on qualification
        Tailoring your CV for each application
        Securing a trainee Chartered Accountant role
      • Support & services
        Becoming a student FAQs
        Who to contact for employers
        Register for a school visit
    • Becoming a
      student

      Study with us

      Read More
  • Members
      • Members Hub
        My account
        Member subscriptions
        Newly admitted members
        Annual returns
        Application forms
        CPD/events
        Member services A-Z
        District societies
        Professional Standards
        Young Professionals
        Careers development
        Recruitment service
        Diversity and Inclusion Committee
      • Members in practice
        Going into practice
        Managing your practice FAQs
        Practice compliance FAQs
        Toolkits and resources
        Audit FAQs
        Other client services
        Practice Consulting services
        What's new
      • In business
        Networking and special interest groups
        Articles
      • Overseas members
        Home
        Key supports
        Tax for returning Irish members
        Networks and people
      • Public sector
        Public sector news
        Public sector presentations
      • Member benefits
        Member benefits
      • Support & services
        Letters of good standing form
        Member FAQs
        AML confidential disclosure form
        Institute Technical content
        TaxSource Total
        The Educational Requirements for the Audit Qualification
        Pocket diaries
        Thrive Hub
    • Members

      View member services

      Read More
  • Employers
      • Training organisations
        Authorise to train
        Training in business
        Manage my students
        Incentive Scheme
        Recruitment to and transferring of training contracts
        Securing and retaining the best talent
        Tips on writing a job specification
      • Training
        In-house training
        Training tickets
      • Recruitment services
        Hire a qualified Chartered Accountant
        Hire a trainee student
      • Non executive directors recruitment service
      • Support & services
        Hire members: log a job vacancy
        Firm/employers FAQs
        Training ticket FAQs
        Authorisations
        Hire a room
        Who to contact for employers
    • Employers

      Services to support your business

      Read More
☰
  • The Institute
☰
  • Home
  • Articles
  • Students
  • Advertise
  • Subscribe
  • Archive
  • Podcasts
  • Contact us
Search
View Cart 0 Item
  • Home/
  • Accountancy Ireland/
  • Home/
  • AI articles

Nonprofits facing tighter controls

Oct 06, 2022

Prosecutions against charities that do not file their annual report with the Charities Regulator will be ‘the next step’ in the regulation of the sector, writes Colin Kerr

The Charities Regulator is calling on non-profit organisations to prioritise compliance and transparency to support public trust at a time of rising regulation in the sector.

Published in late July, the Charities Regulator 2021 Annual Report revealed that just 64 percent of registered charities in Ireland had filed their annual reports on time.

Commenting on the finding, Helen Martin, Chief Executive of the Charities Regulator, said there had been a decline in the number of charities filing their annual reports within the required timeframe, a trend she called ‘disappointing.’

“Our registration and compliance units are assessing why some charities are failing to meet this statutory requirement,” Martin said.

Providing an overview of a charity’s finances and activities on the Public Register of Charities, these annual reports are an “important means” for registered charities to provide basic information to the public, Martin added.

“The question for charities is whether they can afford not to comply with the requirement to file annual reports. Funding is the number one concern for charities we surveyed last year, and as inflation brings an increased cost of living, it will remain so,” she said.

“There is a strong link between greater transparency and accountability and public trust in the sector, making their annual report to the Charities Regulator an important means for registered charities to provide basic information to the public on their finances and activities in the previous year.”

Under the Charities Act 2009, every charity must submit its annual report to the Charities Regulator ten months after its financial year ends.

“In 2021, we noticed a drop-off in the rate of compliance with this requirement,” said Tom Mulholland, Director of Compliance and Enforcement with the Charities Regulator.

“The Charities Regulator came into existence in 2014 and, every year prior to 2021, the rate of compliance was increasing year-on-year.

“We are concerned with the reduction of the number of charities filing their annual reports on time, as this is a legal requirement.”

Mulholland pointed out that filing an annual report to the Charities Regulator was not an onerous process.

“The report is filed online, and it is a straightforward form, which requires basic figures including income, expenditure, assets, and liabilities. It is an opportunity for charities to give details of the work they carry out,” he said.

“There is a free text section on the form, which allows the charity to detail their activities, which means that if someone is looking up a charity on the Register of Charities website (charitiesregulator.ie), they can see from the most recent annual report what the charity itself is saying about its activities.”

Those charities that file their annual reports to the regulator were also demonstrating to the public that they were compliant with their obligations.

Mulholland said: “This should be a comfort to someone who decides to donate to a charity, and it also allows the donor to get information about the charity in terms of its income, expenditure and activities.”

While the Charities Regulator had always been ‘proportionate’ in its interaction with charities, Mulholland said that, in the interest of fairness and due diligence, it had to consider those charities which were making the effort to be compliant when dealing with non-compliant parties.

“We are considering our options when dealing with those charities that do not file their annual reports to the Charities Regulator,” he said.

“It is possible to remove a charity from the Register of Charities. This has serious consequences–an entity that is not on the register is not permitted to call itself a charity or conduct any charitable work under the Charities Act.

“It is also an offence under the Charities Act not to file an annual report with the Charities Regulator and we are actively contemplating acting against those charities that are not compliant,” he said.

Mulholland said that the Charities Regulator could opt to prosecute a charity in the District Court.

Prosecutions have been taken against entities acting as charities, which are not on the Register of Charities. To date, however, no prosecution has been taken against charities that do not file their annual reports.

“The Charities Regulator is evolving and we have been in business since 2014. We take a proportionate response in relation to our interactions with charities and we tend to interact with charities rather than dictate actions to be taken,” Mulholland said.

“Having said that, prosecutions against charities, which do not file their annual report with the Charities Regulator, will be the next step in the development of regulation of the sector.”

Under the Charities Governance Code, Chartered Accountants looking after the accounts of a charity should have access to the minutes of the meetings of the charity’s trustees.

“Accountants working with charities should be able to see these minutes, which should show that the trustees are taking an active part in the running of the charity and that the decisions they make are clear from the minutes,” said Mulholland.

“There is also legislation before the Oireachtas, the Charities (Amendment) Bill 2022, which provides for the introduction of accounting regulations in relation to charities, which will supply a format for the preparation of financial statements in relation to charities. The Bill will also herald the introduction of Charities’ Statement of Recommended Practice (SORP) requirements for charities with an income of more than €250,000.”

Already in force in Britain, SORP is not yet a requirement in the Republic of Ireland. The Charities Regulator is also continuing to promote the Charities Governance Code, which sets out minimum standards for managing and controlling Irish charities.

The code was established to help charity trustees implement processes that meet their legal duties under charity legislation. “The code was rolled out in 2021 and we are pleased with the uptake, which is around 69 percent,” said Mulholland.

“One of the aims of the code is to encourage transparency in Irish charities. One of the ways charities can show transparency is through the clarity of their financial statements.

“We would also urge charities filing their accounts with the Companies Registration Office to file their full financial statements rather than their abridged statements.”

In conclusion, Charities Regulator Chief Executive Helen Martin said that compliance with the Charities Governance Code, and with the requirements of the Charities Regulator, could only benefit individual charities directly.

“It is public money that is being spent here,” Martin said, “and everybody from the donors to the Regulator to the charities themselves want to make sure that these funds are spent in a transparent and accountable manner.”

The latest news to your inbox

Useful links

  • Current students
  • Becoming a student
  • Knowledge centre
  • Shop
  • District societies

Get in touch

Dublin HQ

Chartered Accountants
House, 47-49 Pearse St,
Dublin 2, Ireland

TEL: +353 1 637 7200
Belfast HQ

The Linenhall
32-38 Linenhall Street, Belfast
Antrim BT2 8BG, United Kingdom.

TEL: +44 28 9043 5840

Connect with us

CAW Footer Logo-min
GAA Footer Logo-min
CARB Footer Logo-min
CCAB-I Footer Logo-min

© Copyright Chartered Accountants Ireland 2020. All Rights Reserved.

☰
  • Terms & conditions
  • Privacy statement
  • Event privacy notice
LOADING...

Please wait while the page loads.