Helping charities deal with audits

“I think we can offer a unique perspective: not only do we head up the not-for-profit and charity audit department, Sylwia and I are both directors of not-for-profits ourselves,” said Thomas McDonagh, director, UHY Farrelly Dawe White Limited.

“This gives us a first-hand insight into the operations of a not-for-profit and we understand the pressures that voluntary directors are under.”

Supporting the charity sector is something the company takes pride in, said UHY audit and accounts senior manager and charity specialist, Sylwia Willis. “We are members of The Wheel; we attend their events so we can understand the sector better. Some of the team attended the recent Charity Summit organised by The Wheel with me last week. We are also proud to have been recently appointed to the technical assessment panel for the Carmichael Good Governance Awards.”

It can be a challenge for people in the not-for-profit sector to keep up to date with legislative and compliance requirements, said Willis. “We await the enactment of the Charities Amendment Bill 2022 and we welcome some of the proposed provisions, particularly the clarification of the requirement to produce financial statements that comply to the Charities SORP [Statement of Recommended Practice].”

Willis went on to explain that while SORP is intended to provide clarity and transparency in financial reporting for charities, there are some nuances in applying the SORP.

“Unless you have prior experience in financial reporting, this is not something that every charity and not-for-profit organisation can do on their own, they need the support of experienced professionals,” she said.

McDonagh explained the importance of the audit to not-for-profit stakeholders.

“In profit-orientated companies where in the case of a lot of Irish SMEs the directors and shareholders can be one and the same, the audit is sometimes viewed as a compliance exercise or a necessary evil,” he said.

“In the not-for-profit sector the audit is seen differently. There are many disparate stakeholders including funders, service users, directors and the team employed by the charity. Each stakeholder is seeking their own assurances from the audit. Funders want assurances that funding terms have been adhered to. Service users and the public welcome the transparency that an audit brings. The directors want to know that the control environment is sound and the policies they have implemented are being followed.”

Willis said that they provide a range of services from statutory audit to accounting and compliance services for non-audit clients. “Our specialists are committed to providing comprehensive charity audit and accounting services which help you maintain a financially sound organisation,” she said.

“We are seeing an increasing move toward requests to provide internal audit services to clients where we do not act as statutory auditors. Directors/trustees are seeking a greater level of assurance over the internal operations of the organisation they are volunteering with. It is worth noting that a director of a charity has the same statutory obligations and responsibilities as the director of any other company.”

UHY Farrelly Dawe White Limited has experience of working with a wide range of not-for-profit organisations. “We understand that they need to operate within tightly controlled finances subject to public scrutiny. With increased competition for grant funding and charitable giving and a greater burden of compliance, we help ensure organisations are prepared to deal with the challenges,” said McDonagh.

He also referred to Sylwia’s mention of the Charities Amendment Bill and commented on the proposed increase in the audit exemption threshold for charities. “I think this is important for very small charities – organisations with low levels of income cannot sustain the cost of a compliant audit, particularly with the increased compliance burden in our own industry as we deal with the recent International Standard on Quality Management (ISQM1) and multiple revisions to auditing standards (ISAs).”

“It is so good to see the other side, to see how much work goes into running a charity,” Willis said.

Thomas McDonagh is a fellow of the Institute of Certified Public Accountants in Ireland and chairs its Financial Reporting Sub-Committee. He is a director and treasurer of Dundalk Chamber of Commerce and promoter for the Dundalk Chamber Skillnet.

Sylwia Willis, a chartered accountant, is an audit and accounts senior manager and charity specialist. She is treasurer of a Credit Union in Co Down and director of Louth Volunteer Centre.