As the 2025 audit cycle closes and planning begins for the March 2026 year ends, we’ve reviewed the most common findings raised across charities and not-for-profit organisations.
Several recurring themes appeared around governance and internal controls.
Below is a summary of the main issues and how charities can strengthen their processes for 2026.
Related Parties and Registers of Interests
The most frequent issue concerned incomplete or outdated registers of interests. In many cases, trustee information did not align with Companies House or Charity Commission records, and some registers were not updated annually. Register of interest forms were often seen as a requirement for audit purposes rather than a governance control to manage potential conflicts.
How to strengthen controls:
- Train trustees on appointment, and annually, on capturing all relevant interests, including those of close family members.
- Ensure completed forms are checked against public records for completeness.
- Treat related party disclosures as an essential governance tool, not just an audit requirement.
Transparent reporting of related-party transactions supports sound decision-making and protects the charity’s reputation.
Salaries, HR Documentation, and Right to Work Checks
Issues were commonly identified in employee files, particularly for long‑standing staff. Missing or outdated documents included employment contracts, pay change notifications, and evidence of Right-to-Work checks.
Recommended actions:
- Ensure every employee has a current contract and accessible documentation supporting their salary and benefits.
- Maintain authorised pay rates and updated personnel records.
- Verify and document Right-to-Work checks for all staff, including retrospective checks where required.
Charities generally had strong payroll systems, but supporting documentation didn’t always match the controls in place.
Fixed Asset Registers and Policies
Several charities displayed inconsistencies or errors in their fixed asset registers. Common issues included:
- Out-of-date registers holding assets no longer in use.
- Mismatches between register categories and those shown in the financial statements.
- Depreciation rates inconsistent with accounting policies.
- Errors caused by manual input or incorrect formulas.
- Items are capitalised incorrectly based on the charity’s stated thresholds.
Improvements to consider:
- Review capitalisation thresholds and depreciation rates to ensure they remain appropriate.
- Perform regular integrity checks of the asset register, ideally twice a year or as part of routine management reporting.
A Positive Trend
The encouraging news is that most charities acted on recommendations from the 2024 audit cycle, leading to fewer repeat findings in 2025. Governance and financial controls across the sector appear stronger and more mature than a decade ago. Addressing the remaining common issues above will help charities further safeguard their finances and uphold public trust.
For more information, please contact our Charities and Not-For-Profit team here.
This material is for informational purposes only and should not be relied upon as professional advice.
