Accountants To Be Shy Of Charity Work In Future ?

[trajan]

I often thought charity work dangerous for accountants.

On the one hand their professional status made a charity a client like every other insofar as scrutiny of accounts were concerned. On the other hand, a particular accountant was often hand-picked by say a school-time acquaintance for what was often expected to be free and indulgent professional services.

It goes without saying that individuals in several small one- or two-person practices got badly scalded when their "charity" client benefitted themselves and the accountant was made the fall-guy.

Lately I see larger accounting practices under scrutiny by CAI over follies and dishonesties of their clients.

I wonder will this mean that financial oversight work by accountants for charities will be shied away form in future. In the present sparingly regulated Irish charities space it would hardly be worth the risk.

 

[T McGibney]

I wonder will this mean that financial oversight work by accountants for charities will be shied away form in future. In the present sparingly regulated Irish charities space it would hardly be worth the risk.

This is already the case, and has been so for at least 15 years.

 

[Towger]

Where are these accounts offering free/cheap services to charities?

A charity I am involved with we changed accountants a couple of years ago. The old accountant who specialised in charities charged big money (for clean accounts prepared by two members who were accountants) and to be honest did not do much when it came to auditing. The new accountant is far more thorough, looks for and checks all details. They charge about half as much. The only issue we had was then they looked for copies of the CDS1 submissions, which I refused to give them. As protected personal information could be derived from the data.

 

[T McGibney]

The only issue we had was then they looked for copies of the CDS1 submissions, which I refused to give them. As protected personal information could be derived from the data.

I'm not at liberty to check this out right now but I can't imagine that this concern would normally represent valid grounds for withholding documentary evidence from an auditor?

 

[Towger]

Under GDPR we would have had to contact each donator and looked for permission to share their details. As it was the nature of the charity would allow data protected under the Data Protection acts be derived.

 

[T McGibney]

Under GDPR we would have had to contact each donator and looked for permission to share their details.

...with your auditor? I very much doubt if that is the case. By their very nature, pretty much all audit files will include sensitive and confidential personal information pertaining to third parties, eg employees.

 

[Towger]

Employees are not a 3rd party and Payroll Data is exempt from the Data Protection Acts.

 

[24601]

Under GDPR we would have had to contact each donator and looked for permission to share their details. As it was the nature of the charity would allow data protected under the Data Protection acts be derived.

Here's another good example of the GDPR being completely misinterpreted. The legal basis for processing the data in this case is not consent so there would be no need whatsoever to get permission.

 

[T McGibney]

Employees are not a 3rd party and Payroll Data is exempt from the Data Protection Acts.

Ok, I'll take your word for it on that, but I stand by my earlier comments. Full traceability on significant donor receipts and documentation relating thereto would be IMHO a sine qua non of any charity audit.

 

[trajan]

The only issue we had was then they looked for copies of the CDS1 submissions, which I refused to give them. As protected personal information could be derived from the data.

I don't want to get into the GDPR thing. And it's your own decision anyway - it's not for people not responsible to replay your moves.

But the thing is you seem to have engaged your charity's accountants on a regular commercial basis, so much work to be done and charged at the standard rate for that kind of work, no favours asked for or given.

I wonder if this is the case with many other charities, historical societies, clubs, associations and so on. You often used to find a connection - family or friendship - between the professionals hired and at least one prominent member of the board of the charity.

But that's too risky now.

Maybe we'll finally get a proper Charities' Act with explicit regulations for:

* Full accounts (BS, I&E, CFS) to be published

* Corporate governance procedures for charities

* Constraints on nature and extent of funds application

* Total disclosure of senior management's salaries, benefits & expenses

* Charities' Regulator Bureau establishment

 

[T McGibney]

I wonder if this is the case with many other charities, historical societies, clubs, associations and so on. You often used to find a connection - family or friendship - between the professionals hired and at least one prominent member of the board of the charity.

But that's too risky now.

I'd guess that very few non-charitable clubs, societies etc are audited nowadays. Audit services apart, such organisations can hire whomever they wish for professional and other work.

But the old idea that the auditor could be a person closely connected with a board member of an audit client has been regarded as for the birds for decades now, and rightly so.

 

[Peanuts20]

It all comes down to how the board manage the charity, A competent board should always insist that someones "mate" is not getting the business, that protects everyone.

 

[T McGibney]

It all comes down to how the board manage the charity, A competent board should always insist that someones "mate" is not getting the business, that protects everyone.

For all work? It would be silly in the extreme for example to rule out engaging the local handyman or plumber just because they happen to be friendly with one or more members of the board. Especially if the organisation is one with a local catchment or function.

 

[Salvadore]

Under GDPR we would have had to contact each donator and looked for permission to share their details. As it was the nature of the charity would allow data protected under the Data Protection acts be derived.

Surely all the auditor needs to know is that the donations came from legitimate sources. If the names of the donors aren’t being revealed or otherwise used, there’s no breach of gdpr.

 

[Peanuts20]

For all work? It would be silly in the extreme for example to rule out engaging the local handyman or plumber just because they happen to be friendly with one or more members of the board. Especially if the organisation is one with a local catchment or function.

Fundamental difference between getting someone to fix a pipe and getting someone to provide a legally required service. At the end of the day, it's the board members reputation that is also at stake here

 

[Towger]

A CDS1 contain the names and PPSN of donators. The auditors know what comes in and what Revenue refunds. Not even the board know who donates and how much. If the donator wants the charity to claim back their tax they are given an anonymous ID number, which they must include with each donation. These are only matched back to send a CDS1 into Revenue. No ID or no valid CHY3 the donation does not go on a CDS1. Revenue does not tell charities how much tax is actually refunded for each donator again for data privacy reasons. So the refunds have to be divided prorata back across different parts of the country, based on their donations. I suspect some areas loose out to others, but it is the only way to do it.

 

[trajan]

Is this side discussion on GDPR issues about:

1. A potential loophole for fiddling; or

2. Nosy auditors getting their hands on a list of donors they can later shake down for more donations or pitch investment offers to ?

Either way, it's really off the point of my original post - which is about the dangers to honest accountants from a charity's management misapplying collected funds.