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Charities - Guidance on Whistleblowing and Covid-19

The Charity Commission / OSCR / CCNI have issued updated guidance regarding matters of material significance which need to be reported to them (which in usual circumstances, include a qualification / emphasis of matter in an audit report), which states:

“Auditors of charities in England and Wales, Scotland and Northern Ireland have a common statutory duty to report matters of material significance to charity regulators, and have agreed a common list of matters of material significance and common guidance to assist auditors or independent examiners in reporting important matters on a timely basis.

It was updated in April 2020, the main changes are:

  • Confirmation that difficulties in carrying out an audit or independent examination that are solely due to a national emergency need not be reported;
  • Amendment to the guidance on the timing of reporting to reflect the different circumstances when a report should be made; and
  • Clarification that the guidance only applies to internal audit engagements in very limited circumstances.”

The updated guidance states the following regarding issues which are (in the short term) no longer required to be reported as a matter of material significance:

“The charity regulators recognise that at times of national emergency the normal conduct of an external audit or an independent examination may be disrupted.  In times of national emergency, unless the legal duty to report is relaxed by Government, the auditor or examiner must still report matters of material significance; however where a modified opinion, an emphasis of matter, or a matter identified by the independent examiner is solely due to the exceptional circumstances of the national emergency affecting the conduct of the audit or the independent examination then this is not considered to be reportable as a matter of material significance to the charity regulator.  This is because remedying this situation is not in the power of the auditor or examiner, the preparer of the charity’s accounts, or the charity regulator.

Examples of such exceptional circumstances are:

  • Travel restrictions prevent the auditor or examiner from verifying the existence of physical assets such as stock;
  • Access restrictions prevent the auditor or examiner from reviewing accounting records and / or from obtaining the assurances required; and
  • Limitations of scope are identified due to the control measures imposed to deal with a national emergency.”