The view of the independent examiner or auditor
In an occasional series, Mike Dunkley, Director of Dunkley’s Accountants, shares with us his take on the role of the independent examiner or auditor.
Dunkley’s has a long-standing working relationship with The Trust Partnership but has always been separate and remains independent. As such, Dunkley’s offers a different and distinct service.
In this article we have focused on the benefits of splitting the duties of record-keeping from the duties of the independent examiner but of course this applies in the same way when audits are required.
State of independence
Charity trustees have a legal duty under the Charities Act 2011 to appoint ‘an independent person who is reasonably believed by the trustees to have the requisite ability and practical experience to carry out a competent examination of the accounts’.
- The examiner must be independent of the charity.
- Independence means that the examiner must not be influenced, or could not be perceived to be influenced, by their relationships with the charity and its trustees.
- Therefore, the examiner cannot be a trustee of the charity. Independence is not the same as having no connection with the charity.
- An examiner can be a supporter of the charity, provided that they do not have a close relationship with the charity or its trustees and they are not involved in the day-to-day administration of the charity.
- Examples of situations that would call an examiner’s independence into question are where they:
- are an employee of the charity or its bookkeeper
- serve on a sub-committee overseeing the charity’s finances
- are a major donor to, or beneficiary of, the charity
- have a significant financial or commercial relationship with the charity or its trustees
- have a close relationship with the trustees or any other related parties.
What about value for money?
It is clear to both The Trust Partnership and Dunkley’s that the separation of day-to-day financial management from the year-end independent review is the best way of ensuring that trustees can demonstrate that they have taken every step possible to ensure full independence.
That said, we all wish to be efficient and effective and get value for money for the services for which we pay. So whilst we are always independent, the fact that Dunkley’s and The Trust Partnership work together on a significant number of projects, and have familiarity of systems and procedures, allows us to work in a cost-effective way and enables us to focus our efforts in the right places.
Avoiding potential conflicts of interest
Sometimes, despite everyone’s best efforts, and having great financial systems in place, we can still make mistakes. The independent review ensures that there is no conflict of interest or any matters arising being obscured. If the same firm provide bookkeeping, management accounts and an independent examination or audit, there is clearly an innate conflict of interest to navigate.
Don’t just take our word for it
Clearly, we are not alone in adopting this position. As Fr Niall Weir, trustee of the West Hackney Parochial Charity, says:
I and my fellow Trustees of the West Hackney Parochial Charity value The Trust Partnership’s excellent Trust Accounting team, and the useful input we have from Dunkley’s as our independent examiners. The separation of these two roles is important to us, providing as it does both efficient accounting and the necessary oversite of our financial reports.
The working arrangement shared between The Trust Partnership and Dunkley’s, established over years of experience and working together, delivers value for money for foundations and almshouse clients whilst ensuring full compliance with the regulations in the best display of independence and integrity.