Charity trustees have an ever-increasing range of responsibilities and are expected to have the expertise and awareness to handle a huge variety of complex topics.
With public finances continuing to be squeezed and the longer-term impact of Brexit, COVID and the rising cost of living still unknown, managing and diversifying income is key for charities. The effective and transparent use of funds and resources is also important. Public trust in the sector has diminished and, as such, stakeholders are demanding to know more about the management of charities and where the money goes. We’ve also seen increasing examples of the fall out of poor governance in the sector of late.
These issues are just some of the things Trustees need to be aware of – the list could go on. They are complex and all come with their own risks. The Charity Commission’s CC26, Charities and Risk Management, requires trustees to regularly review and assess the risks faced by their charity across all areas of its activities and plan for the management of those risks.
Internal audit has a key role to play in supporting trustees with this responsibility and ensuring the right outcomes.
How internal audit can help charity trustees meet these challenges?
‘The role of internal audit is to provide independent assurance that an organisation's risk management, governance and internal control processes are operating effectively.’ - CIIA
A well-run internal audit delivers a number of benefits to charities and trustees and provides assurance over your organisation’s risk and control environment. These include
- Independent review – trustees receive an independent and objective review of control design and operating effectiveness of risk management and internal controls
- Identify potential areas of concern – Serves as an Early Warning System enabling deficiencies to be identified and remediated on a timely basis
- A risk-based approach – focus is aligned to an organisation’s strategic objectives and potential risks to achieving these
- Annual risk, governance, and control compliance statement - internal audit helps trustees confidently discharge their duties under CC3
- Accountability and continuous improvement – through periodic risk focused reviews, internal audit supports a culture of continuous improvement and accountability in senior management
- Building a partnership – internal audits are conducted in partnership with management to help make the organisation stronger while remaining independent and objective.
What value can an internal audit deliver?
Trustees will feel more confident and deliver better outcomes for their organisations and beneficiaries when they are supported by an effective internal audit that not only supports in their risk management role, but also identifies and seizes opportunities to add value. For example, using data analytics built into the internal audit process will provide a more systematic and complete review of business processes; having a team that will use their deep knowledge of the sector to share emerging best practice, benchmark your organisation against peers and provide practical solutions to your challenges; and having access to a wide variety of subject matter experts beyond the internal audit delivery team, such as cyber security specialists, to support your trustees in areas where they need it. The expert, independent review of risk management and controls is also a great step forward towards becoming more sustainable and resilient.
Our internal audit delivers value and confidence
At BDO, our Internal Audit Service offering is designed to bring that added value beyond mere risk management compliance. We use technology, our sector expertise and our subject matter specialists to help bring ideas and innovation to your management leadership teams and Board, helping to achieve business goals.
If you are ready to start a journey of improving governance and outcomes for your charity, we would like to talk to you about how an internal audit can support you.