Charity sector challenges ahead

With new reporting requirements on the horizon, the 2024 Charity Audit Survey highlights the challenges facing the sector and underscores the resilience and adaptability of charities.

The 2024 Charity Audit Survey provides a comprehensive overview of the current landscape and challenges faced by the charity sector.

With 632 organisations participating, the survey highlights key trends, auditor performance, and the anticipated changes in the regulatory environment.

Key Findings

Top Audit Firms

Bishop Fleming has made a significant move up the table of charity auditors, reflecting its growing influence and expertise in the sector.

Anticipated Regulatory Changes

The eagerly awaited publication of the SORP exposure draft in early 2025 is set to bring significant changes to accounting and reporting requirements for charities. This will align with the updated FRS 102 standards, impacting areas such as income and lease accounting.

Charity Expertise and Service Quality

The survey reveals high satisfaction levels among charities, with 95% rating their auditor's charity expertise as good. Bishop Fleming, in particular, has been highlighted for its excellent service and expertise.

Challenges and Opportunities

Financial Pressures

The charity sector continues to face financial pressures, with increased employer national insurance contributions and minimum wage hikes adding to the burden. This has led to a closer examination of reserves policies and going concern considerations.

Impact of Regulatory Changes

The new SORP and FRS 102 standards will require charities to adapt their financial reporting practices. This includes preparing for the inclusion of leases on the balance sheet and addressing legacy income and heritage assets.

David Butler's Perspective

David Butler, Audit Partner and Head of Charities at Bishop Fleming, emphasises the importance of impact reports and statements in annual engagements with stakeholders. They are now becoming a bigger part of charities’ annual engagement with their stakeholders, particularly funders or membership.

He notes:

These reports provide an opportunity to present a fair and balanced review of the year, helping donors and grant funders understand the nuances of a charity's finances.

Conclusion

The 2024 Charity Audit Survey underscores the resilience and adaptability of the charity sector in the face of ongoing challenges.

The report is available on the Civil Society website; a subscription is needed to access the report.

With Bishop Fleming moving up in the rankings and the anticipated regulatory changes on the horizon, charities must stay proactive in their financial planning and reporting practices to navigate the evolving landscape successfully.