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Canine charity slips regulatory leash!

26th Jun 2023
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A leading UK charity caring for unwanted or abandoned German Shepherd Dogs has been brought to heel by the Charity Commission and issued with an official warning for neglecting to file its financial statements for the last five years, in addition to not having the requisite number of trustees.

German shepherd dog
AdobeStock

The charity was created in 2011 but did not formally register with the Charity Commission until 2015 and last filed accounts, annual returns and trustee reports for the financial year 2018. Yelp! Now it’s in the doghouse!

Impact of non-compliance

The charity has been given until the end of June to submit the missing financial statements. Failure to meet this latest filing deadline could result in the Commission taking regulatory action against the charity, including the imposition of financial penalties. Furthermore, a combination of an official warning, plus fines, could damage the organisation’s reputation and impact on its ability to generate the revenue it needs to discharge its charitable activities.

Regulatory response

Public confidence in the governance and accountability of not-for-profit organisations is crucial to their long-term survival and provides reassurance that donations are being used for their intended purpose. So why in this case has the Charity Commission taken so long to act and is its bark worse than its bite? How many charities fail to file accounts and annual returns on time and just how big a problem is this?

Although trustees have an obligation to file their charity’s financial statements, legal compliance is not compulsory (except for charitable companies and charities with a turnover exceeding £25,000), and this is part of the problem as the sanctions and penalties for non-compliance appear ineffective to say the least. In this instance, the charity was repeatedly challenged by the Charity Commission as it was suspected of having exceeded the income threshold, but no formal action was taken until this year. It is unclear how big a problem non-compliance is generally, particularly regarding smaller charities, as the regulator does not currently make this information public.

Conclusion

It must be stressed that most charities fulfil their reporting obligations unflinchingly, and that there is no suggestion here of financial impropriety, but more definitely needs to be done to vet and reign in the stragglers. Perhaps, though, it is high time that all charities be legally compelled to submit financial statements to the regulator, in line with the filing requirements currently applicable to registered companies.  

However, if all else fails the regulator could always deploy an enthusiastic tracker dog to help them locate the missing accounts!

For our financial reporting guide