The Charity Commission for England and Wales (the Charity Commission) has recently issued updated guidance on charities’ financial controls to protect against fraud and new technology risks. Michael Jones, an Audit Partner specialising in the not-for-profit sector here at Bevan Buckland LLP, explains the new guidelines below.
What is included within the updated guidance?
The updated guidance, recently published (known as ‘CC8’) explains the role strong internal financial controls play in ensuring trustees can safeguard their charity’s resources. The restructured guidance is now clearer and more concise and has introduced some added detail that covers issues that were either not in existence or widely relevant to the sector when the guidance was initially drafted. The guidance also includes an updated checklist to help the charity sector–which generates an income of £80 billion a year in England and Wales–put it into practice.
The inclusion of cryptocurrency into the latest guidance is significant, due to the continued rise of cybercrime and the way in which charities are being targeted. Research from The Department for Science, Innovation and Technology has echoed this sentiment within its report that states 24% of charities experienced a cyber-attack in the last 12 months. The survey also found that only 24 per cent of charities have a formal policy in place to manage the risk, suggesting poor awareness of online risks.
New sections of the regulator’s guidance cover issues including using mobile payments systems, such as Google Pay and Apple Pay; and considering donations of cryptoassets, such as cryptocurrency and NFTs.
Risks from cryptoassets highlighted include vulnerability to theft by hackers; potential sudden changes in value; difficulty in tracing donors, and a lack of protection from agencies such as the Financial Services Compensation Scheme (FSCS) or the Financial Conduct Authority (FCA) if something goes wrong.
The regulator has also refreshed existing advice on more traditional risks, such as when fundraising and holding public collections; making payments to related parties; and operating internationally.
Sam Jackson, Assistant Director of Policy at the Charity Commission released the following statement in relation to the updated guidance:
As more and more charities move to operate online and newer technologies are developed, such as the use of cryptocurrencies, trustees will need to navigate risks that might not have been previously considered. We have updated our guidance to reflect the digital age we all live in and worked hard to ensure it is clear and simple to use.
We know there are many internal and external risks to consider which is why we have also updated our helpful checklist so that trustees can have informed discussions about the measures they need in order to best protect their charity’s assets and donations entrusted to them by the public.
Get in touch…
If you are a charity client of Bevan Buckland LLP and require advice in relation to the updated guidance, then please get in touch with your usual Bevan Buckland representative or call us on 01792 410100.