The review looked at accounts filed by 27 charities and found that six charities closed and failed to tell the Commission, six had filed their accounts with Companies House but failed to submit them to the Commission and two charities submitted accounts without the correct external scrutiny which meant they had to be re-filed.

The charities under review are those charities that fail to file accounts properly in two consecutive years, so-called double defaulters. These charities are in default of their legal obligation to file their trustees’ annual report and accounts.

In the 2015-16 class inquiry, evidence was uncovered of poor financial management and misuse of charity funds in three charities and, as a result, three standalone investigations were opened into governance and misappropriation of funds.

The accounts review found that of the majority of the accounts submitted were described as being ‘good and acceptable quality’ with those who used the Commission’s accounts templates more likely to have good quality accounts.

But there are still concerns about the role of trustees and the failure on the part of a number of those in responsible positions to understand the external scrutiny requirements, the Commission warned.

There are also issues with basic governance with six of the incorporated charities reviewed failing to submit accounts with the Commission by the deadline although they had submitted accounts to Companies House on time. The report stated: ‘There was really no reason or excuse for late submission to the Commission other than trustees’ poor oversight.’

All registered charities with an income of over £25,000 and all charitable incorporated organisations irrespective of income must file their trustees’ annual report and accounts and external scrutiny report with the Commission within 10 months of their financial year end.

Nigel Davies, head of accountancy services at the Charity Commission for England and Wales, said: ‘Our class inquiry has ensured compliance in the charity sector by holding trustees to account for failing to abide by their legal duty to file accounts and be transparent, a key driver of public trust in charities.

‘It is disappointing that it required our regulatory action to ensure these charities complied. They showed the ability to report well when they put the effort in as the majority of the charities involved in the class inquiry eventually filed good quality accounts. However, it is concerning that the underlying attitude to compliance on basic duties and accountability to donors and the public remains poor.

This report sends a clear message to trustees that we will take robust action to tackle non-compliance so that charity funds are declared and accounted for on the register of charities.’

Fourteen of the 32 charities that were placed into the class inquiry by the Commission in 2015-16 submitted their accounts to the Commission during the year, as did 13 from the 2014-15 class inquiry. The Commission’s accountants closely scrutinised 69 copies of accounts from these 27 charities. The filing of these accounts led to £15.5m of charity income being accounted for to the general public through the Commission’s register and this brings the total amount reported during the course of the class inquiry to just over £75 million since September 2013.

The Charity Commission report, Accounts monitoring: Wider learning about the standards of accounts in the double default class inquiry 2015-16, is available here

Sara White