Insights

Internal Audit

for Charities and Not-for-Profit organisations

Gaining meaningful assurance over a Charity’s internal controls, risk management and governance processes is of critical importance in discharging the responsibilities of both Trustees and executive management teams.

Both in meeting Charity Commission requirements and just as importantly, achieving the maximum benefits from their sources and having a better focus on achieving outcomes; a valued internal audit function can help you to deliver your strategic objectives more efficiently and effectively.

 

Challenges to the internal control environment

In this period of austerity, the unprecedented economic challenges facing Charities and Not-for-Profit organisations are considerable with ever more organisations chasing a diminishing level of funding.

We have seen how resulting budgetary constraints and cost savings can pose threats to the strength of a Charity’s internal control environment. We have also seen how the demand for services from the Charities and Non-for-Profit sector has continued to rise despite the funding crisis, which when combined with reductions in funding can really stretch organisations and adversely impact on their internal control framework.

Charities are facing additional challenges in terms of cost reduction programmes; working more with third parties (either partnering with or sub-contracting to) in the delivery of their services; and, having to place increasing reliance on complex technology solutions to manage and deliver their services. This creates new challenges that may impact on how the Charities operate, the controls they need to put in place and the way the resulting risks are managed effectively.

 

Changing demands of the internal audit function

The purpose and remit of Internal Audit in Charities and Not-for-Profit organisations has continued to evolve. We have seen how the more dynamic Charities have started to demand greater value from their internal audit functions. From the development of Assurance frameworks through to proactive advice on risk, control and governance processes, we have seen a fundamental and welcome shift away from cyclical compliance auditing that dominated the sector in the past. Of course, Internal Audit should not stand still, and with the challenges facing Charities and Not-for-Profit organisations, Internal Audit needs to be focusing on giving meaningful assurance on the key risks that impact on Charities as they navigate through this unprecedented period.

But how should Internal Audit be utilising its scarce resources to deliver this concept of meaningful assurance? Following research we conducted in conjunction with the Institute of Internal Auditors in the UK, we concluded that there is increasing demand for the scope of Internal Audit to continue to work differently in the future.

This change in remit for Internal Audit functions, moving into areas which go beyond the more traditional compliance work undertaken in some organisations, requires a change both in the individuals within the function and the skills they have access to. 

Read more about Internal Audit for charities and not for profit

How we can help you

We work with over 800 organisations within the sector, and have a dedicated Charities and Not for Profit group made up of 400 professional staff with expertise in the sector providing all aspects of audit, tax and advisory services.

Our dedicated internal audit practice is one of the largest providers of internal audit and risk services in the UK, and has extensive experience of providing services to a many Charities and Not-for-Profit organisations.

Did you find this useful?