Managing director Gerrard Financial Consulting
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May charity compliance: Tips for fraud prevention

15th May 2018
Managing director Gerrard Financial Consulting
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Jen Gerrard reports on fraud prevention, GDPR and safeguarding guidance. Read on for this full sector compliance update.

10 top tips for fraud prevention

The Charity Commission for England and Wales (CCEW) published a study about insider fraud and charities on 26 April 2018. The headline reads “almost three quarters of insider frauds at charities enabled by excessive trust and lack of challenge from others within the charity”.

Complimenting the release of their report (which can be found here in full), the CCEW have also published some anonymous case studies around insider fraud in an attempt to better highlight some of the issues which prompted a review.

Highlights from the findings include:

  • In 19 of the 20 charity cases analysed, the absence of appropriate controls was the primary enabling factor. Trustees should ensure that counter fraud controls are both in place and being consistently applied
  • Of the charities surveyed, who was found to have committed the frauds?
    • 43% by an employee
    • 33% by a trustee
    • 10% by a volunteer
    • 10% ’other’

(4% did not answer this question)

Michelle Russell, Director of Investigations, Monitoring and Enforcement at the Charity Commission, said at the time of publication: “Today’s report has confirmed what we already suspected from our casework in this area. The crucial lesson for charities isn’t about introducing lengthy counter-fraud policies. It’s about changing people’s behaviours and encouraging staff and all those involved in charities to be vigilant and speak out when things don’t seem right.”

“The vast majority of charity workers do incredible work but, as we’ve seen in some troubling cases recently, sadly charities aren’t immune to fraud. A dangerous combination of a lack of accountability and controls not being consistently applied can make any charity - big or small – vulnerable, and create opportunities for fraudsters that will have devastating effects.”

Tips fraud prevention
The Charity Commission for England and Wales

New welcome pack for trustees

On 30 April 2018 the Charity Commission for England and Wales (CCEW) published a new welcome pack for trustees. This pack will be automatically emailed to all new trustees, upon registration of their email address with the CCEW.

The contents of the pack include:

  • Get to know your charity
  • Expect to do these things soon
  • Get to know your six main trustee duties
  • What you need to send us
  • How we can help you
  • If things go wrong
  • Contact book

See the full pack here (Welsh language version also available).

GDPR focus

With GDPR coming in to effect on 25 May, the CCEW have reinforced the message to charities about the need to be ready.

Published on 4 May 2018, the latest GDPR message includes links to the following to ensure that charities have access to the essentials:

OSCR blog watch

OSCR have released the following guidance for Scottish charities since our last update:

Consultation outcomes

HM Treasury (HMT) consulted on two measures, the use of cheques as evidence of payment and compensation in the event of an ICS loss, to support the introduction of the Image Clearing System (ICS) for cheques.

ICS is an innovation that cuts down cheque clearing times from a possible six days to one day by sending a digital image of the cheque for clearing, rather than the paper cheque itself.

On 30 April 2018, HMT published their response to the consultation – see the full response here.

Consultations open or pending a response

Here’s our monthly round-up of (and links to) key consultation opportunities and those closed, pending feedback.

The following consultations are currently open and inviting a response:

Charity Commission for England and Wales

Charities that are connected with non-charitable organisations: maintaining your charity’s separation and independence. This consultation closes at 5pm on 15 May 2018. The draft guidance can be viewed here and responses are invited via an online survey facility, accessible here.

Charity Tax Commission (CTC)

The CTC has called for a review of charitable tax reliefs, with the last comprehensive review being conducted some 20 years ago. The CTC say that the are “keen to receive thoughts about the effectiveness of current reliefs and whether the existing system could be improved in order for charities to better serve their beneficiaries.”

Submission of the call for evidence template, downloadable here, is to be made via email to [email protected] by 5pm on 6 July 2018.

The following consultations are closed with feedback analysis pending. Watch this space for an update in future briefings:

Fundraising Regulator: Three-part consultation on the Code of Fundraising Practice

The first two parts (A and B) invited feedback on specific issues raised by the sector in relation to complaints handling and the TPS Assured Certification. Part C proposed to introduce a new section to the Code for online fundraising platforms and aims to ensure that these platforms provide adequate and clear good practice guidance to individuals setting up a fundraising page on their sites. 

It also aims to ensure relevant platforms follow the legal requirements set out within the recently introduced Payment Services Regulation 2017.

Charity Commission and OSCR – Charities SORP

A consultation was launched on 20 February 2018 (which ran until 4 April 2018) focusing on 21 proposed amendments to the SORP which were considered necessary as a result of the changes made in December 2017 to FRS 102.

These changes are to be made via a second Update Bulletin and include:

  • the introduction of an accounting policy choice for entities that rent investment property to another group entity
  • the clarification of the accounting treatment for payments by subsidiaries to their charitable parents that qualify for gift aid
  • the clarification of the requirement for comparatives for disclosures required by the SORP
  • the introduction of a requirement for a net debt reconciliation to be prepared as a note

Initial consultation responses can be viewed here, pending analysis of full feedback.

Charity Commission for England and Wales:

The use and promotion of complementary and alternative medicine (CAM): making decisions about charitable status – closed on 19 May 2017. This consultation is about the Commission’s approach to deciding whether an organisation which uses or promotes CAM therapies is a charity.


Charity Commission for Northern Ireland

Annual monitoring return 2018 – closed on 21 November 2017. Changes to apply to charities’ financial years starting on or after 1 January 2018. A full consultation report is due in Spring 2018.

Office of Tax Simplification (OTS)

Review of depreciation and capital allowances and whether the use of accounts depreciation to provide relief for capital expenditure instead of capital allowances would simplify the preparation of tax returns for incorporated and unincorporated business. Deadline for responses was 30 November 2017. For more information about the OTS’s call for evidence see here.

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