Auditors must flag Oxfam-style scandals to regulators when reviewing the books of charities, Britain's top accounting watchdog urged this morning.
The Financial Reporting Council (FRC) reminded bean counters of their responsibility to report "matters of material significance" to the Charity Commission.
The call comes after the Charity Commission for England and Wales last week published a paper highlighting the "low level of reporting" by auditors.
In the six months to 31 October 2017, 114 charities gave audit opinions raising matters of material significance. But the commission said it was of "significant concern" only 28 of the reports had been received.
“Auditors of financial statements of charities are required to have an understanding of the legal and regulatory framework applicable to the charity and the sector in which it operates," FRC executive director Melanie McLaren said today.
"This includes being familiar with the charity regulators' guidance on reporting matters of material significance and other relevant charity regulators' guidance. Accordingly, the auditor should be able to identify matters that should be reported to a charity regulator.
The FRC supports The Charity Commission for England and Wales (CCEW) in reminding auditors of their responsibilities to inform it of matters of material significance in order that the CCEW can engage promptly with charities facing difficulties.
A spotlight is being shone on the charity sector after it emerged some Oxfam employees had used prostitutes in Haiti following a devastating earthquake in 2010. Save the Children has said it investigated 53 sexual conduct allegations in 2016.