CFDG urges Government to consider charities when reforming director & auditor liability

25th March 2004

The Charity Finance Directors' Group have today urged the government to consider the perspective of charities in their plans to reform director and auditor liability.

CFDG's response to the consultation, which was developed in consultation with their Policy Development Working Group, reminded the government that any reforms could potentially have a huge impact on charities. At the same time charities are subject to very different audit and governance rules and would therefore face their own separate issues.

In their response CFDG stated that, on balance, auditors should be allowed to limit their liability contractually, subject to rules set by the Secretary of State. However, they urged the government to recognise that if charities were forced to negotiate, they would be in a weaker position against the auditors in the majority of cases. Auditors would therefore be able to dictate the terms of the agreement

CFDG also asked the government to consider the effect that liability has on the recruitment of trustees and the rising cost of trustee indemnity insurance.

Shirley Scott, Chief Executive of CFDG, said: "The consultative document addressed a number of issues that are relevant to charities and in relation to the sections on auditing, specifically relevant to charity finance directors. It was especially important that CFDG responded to this consultation as we represent an important and unique group of finance directors with their own specific issues separate from those of for-profit companies."

Notes to Editors:

1. CFDG have today responded to the Department of Trade & Industry paper on 'Director and auditor liability'.

2. The Charity Finance Directors' Group was set up in 1987 and is an umbrella group that specialises in helping charities to manage their finance-related functions.

3. CFDG's 1000 plus members are responsible for the finances of charities with a wide variety of income levels. Over 60% of the top 500 charities are members of the CFDG. Between them CFDG members manage about £10 Billion in charity income per year.

 

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