We believe that the typical model for charities, where a firm of auditors (or independent examiners) provides strategic advice to trustees and prepares the annual accounts, year after year, does not serve the best interests of the trustees for three reasons.
- In making decisions about the way funds are managed, accounted for and presented in the accounts, there is no clearly independent external oversight.
- Auditors are aware that trustees rarely change auditor, meaning that fees may not be paid at the current market rate.
- We often see fairly rudimentary tasks being completed by overqualified and expensive accountants.
The solutions to these problems seem simple to us:
- Separate the financial management and annual accounting function away from the audit.
- Only pay an auditor for the independent external review of the accounts that trustees need, and tender this work regularly.
- Use bookkeepers and management accountants focussed on and experienced in the charity sector to save time and money.
Furthermore, not only does outsourcing your finance function save you money, but it also builds institutional resilience; having an outsourced finance team means that you are no longer overly reliant on the skills of a treasurer or sole member of staff.
Trust Accounting is a registered company limited by guarantee.