The Charity Commission has recently opened a statutory inquiry into an Essex-based charity following persistent non-compliance with its reporting obligations.
The charity first came to the Commission’s attention after failing to submit its annual accounts for two consecutive years. At the time of writing, three sets of financial statements remain outstanding, with the December 2022 accounts reported to be over 850 days overdue.
While this may represent an extreme example, it serves as an important reminder that filing annual accounts and returns is a legal requirement, not an administrative formality. Persistent failure to comply can result in regulatory action and reputational damage.
The Commission’s published guidance for trustees clearly sets out the six main legal duties:
The Six Duties of a Trustee
1. Ensure the charity is carrying out its purposes for the public benefit
2. Comply with the charity’s governing document and the law
3. Act in the charity’s best interests
4. Manage the charity’s resources responsibly
5. Act with reasonable care and skill
6. Ensure the charity is accountable
Timely preparation and submission of financial statements sit squarely within these duties, particularly managing resources responsibly, complying with the law, and ensuring accountability.
Can Trustees Be Held Liable?
While unlikely, it is possible to be held liable as a trustee if you cause financial loss through acting improperly or where a third party has a claim against the charity that the charity is unable to settle.
Governance issues rarely arise overnight; they often develop from small oversights that go unaddressed. Persistent late filing can quickly shift from an administrative matter to a regulatory concern. Good governance is proactive, not reactive. Meeting reporting deadlines remains one of the clearest and most visible demonstrations of trustee accountability.
About MHA Not-for-Profit eNews
MHA’s Not-for-Profit eNews provides regular insights on key developments affecting charities, education providers, and social enterprises. To discuss how these updates may affect your organisation, please contact a member of our Not-for-Profit Audit and Advisory team.
