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CFG responds to government consultation on restoring trust in audit and corporate governance

Large charities back CFG’s call for proportionate reporting and auditing laws.

Charity Finance Group (CFG) has responded to a government consultation on restoring trust in audit and corporate governance.

Launched in March 2021 by the Department for Business, Energy & Industrial Strategy (BEIS), the consultation is part of Government plans ‘to strengthen the UK’s framework for major companies and the way they are audited.’

CFG’s response to the government’s white paper and consultation has been submitted on behalf of CFG’s charity members and is endorsed by 16 large charity and corporate members, including British Heart Foundation, National Trust, Great Ormond Street Hospital and Oxfam.

CFG’s response focuses on four main areas of interest to charities:

  • Charity context, applicability and proportionality
  • Resetting the scope of regulation and the definition of PIE
  • New Corporate Reporting, specifically the Resilience Statement
  • Enforcement Against Directors of PIEs

Robert Fusco, Director of Policy and Communications for CFG, explains:

“The Government’s white paper – Restoring Trust in Audit and Corporate Governance – contains a number of proposals that, if implemented in full, will affect how companies and large charities report on their governance and finances and could alter how charities are audited.

“Through consultation with our charity members and corporate partners, we have identified the areas that are of broad concern to charities and social change organisations. One of our specific concerns is the proposal for a new and expanded definition of Public Interest Entity and how it will apply to charities. We have also taken a view on the government’s proposals on corporate governance and new powers that could affect charity Trustees.”

The response welcomes the proposal to introduce a statutory requirement to publish an annual Resilience Statement but cautions that additional reporting must meet an identified need and is proportionate.

Ed Mayo, Chief Executive of Pilotlight, comments:

“After a pandemic in which the worth of charities and volunteering has played such a vital role, it is deeply disappointing that we are seeing audit proposals come forward that offer no recognition of the sector and that worse, would burden charities with inappropriate red tape designed for investor owned corporates.”

Jane Cunliffe, Oxfam Chief Finance Officer, says:

“Oxfam believes the corporate reporting framework does need improvement, in particular to ensure that companies report on human rights and environmental due diligence. We agree with the Charity Finance Group’s call for improvements in transparency, accountability and the quality of audit, and that where there are existing standards, such as those of other regulators, these should be taken into account in ensuring the right level of reporting and oversight.”


Pesh Framjee, Special Advisor to CFG and Global Head of Social Purpose and Non Profits at Crowe, comments:

“It’s not that charities don’t need to be regulated or that there is no need to raise the bar – the key area of concern is that charities often get swept into regulation that is designed for the private sector.

“The problems that this initiative is trying to address are not seen in the charity sector and there are a number of more appropriate ways that improvements can be made. Sector specific regulatory frameworks, codes and good practice can all be used, after consulting with the sector.”

Caron Bradshaw, CEO of Charity Finance Group, adds:

“The government’s drive to increase trust and transparency is to be welcomed by all. However, we need to break this long but flawed habit of shoehorning charities into regulation and legislation designed for the for-profit world to avoid the unintended and harmful consequences such an approach brings about for the third sector.

“The robust legal and regulatory environment that charities operate within is not ‘less than’ that applied to private enterprise. Government must ensure that it does not increase the burdens and costs placed on charities without there being a compelling case and a corresponding level of benefit, otherwise it will be guilty of reducing their ability to deliver effectively for their beneficiaries at a time of high demand and constrained resource.”

“We thank our member charities and corporate partners for working closely together to formulate this important response. And we look forward to working more closely with government on designing policy that increases trust and transparency whilst remaining appropriate and proportionate.”

Read CFG’s response.

 

About Charity Finance Group

Charity Finance Group (CFG) is the charity that inspires a financially confident, dynamic and trustworthy charity sector. We do this by championing best practice, nurturing leadership and

For further information, please email:

Emma Abbott, Communications Manager, CFG.

Roberta Fusco, Director of Policy and Communications, CFG.

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