My last blog gently encouraged us to press the pause button as we come out of lockdown. I meant every word at the time and still do, but I probably need to revert to my usual grumpy self or my friends might start to worry about me.
So this time I’m writing about charities year end accounts. For most charities it’s that time of year when trustees and executive have to get their annual accounts completed and signed off. For some of us it’s straightforward enough; for others it can be an anxious time.
I’ve looked at several sets of accounts in the last few weeks; some make interesting reading. What triggered these thoughts was a beautifully prepared set of accounts; and so they should with the accountant’s bill over 3 times what it should have been, (more than 20% of the charity’s income; not exactly good use of donated funds!). Looking at the accounts I found 3 serious issues that had been overlooked. A contingent liability of £50,000 had not been mentioned. The assets had been seriously understated. A serious incident report hadn’t been filed. It’s unusual to understate assets; It’s usually the other way round. Both have their dangers. I’ve been involved with a couple of situations where the charity claimed ownership of assets, which they didn’t actually own, though to be fair, they thought they did ’till I asked a couple of questions.
Thing is, I’m not an accountant. I know lots of accountants who I respect and admire. But there are always the useless ones that really need to be called to account. (If you don’t believe me read my blog on the Wrekin Ruby, a 2kg lump of rock which the company persuaded the auditor was worth some £11m when its real value was about a hundred quid.When a proper auditor came along and dug down a little, the company was shut down with a big workforce losing their jobs.)
Whenever I’m training charity independent examiners, (I don’t actually train; I tell them stories, which got me in trouble with the professional body some years back), I always tell them yes, it’s important that accounts are well prepared, but it’s more important to get behind the figures and see what’s really going on, to see the wood from the trees, in other words, keep the big perspective in mind.
Some years back I worked on a Charity MOT, to help charities review their operations. It worked to a point, but I think it got too detailed, and it fell by the wayside. Now I’m not in charge of anything I’m trying to find a better, simpler way to help charities evaluate their governance and operational effectiveness. I think I’ve found the solution. Much more user friendly than before, also inexpensive It will soon start to be rolled out. Drop me a line if you’d like a ruler run over your operation. It looks at governance and operations and anything else that’s relevant to your situation.
My next blog won’t be at all grumpy; it’s about an albatross.