Auditors and Charities Need to Meet Halfway

When Children-AtRisk Empowerment (CARE), a youth development organisation, changed its auditors in December 2013, founder and director Lan Teo was met by quotes exceeding SGD20,000 or auditors telling her they were unwilling or too busy to take on the job. "I was told that charities are now seen as being as high risk as construction companies.

That's when I heard many stories of other charities having problems with their auditors," said Mrs Teo. CARE eventually moved on to an auditor who charges SGD7,000 a year. CARE is not an exception to the rule. Charities have found it increasingly difficult to engage auditors, and have gone as far as to raise the problem with the office of the Commissioner of Charities.

Auditors have been shying away from taking on audit engagements with charities because they have either been unwilling to pay a fair fee, or because of the perceived difficulties of delivering an audit opinion of charities that meet with the requisite audit standards and regulations.

The problem is not insurmountable; it can be fixed if charities adjust their own expectations of auditors, and also if auditors' perspectives of the charity sector change, said Gerard Ee, President, ISCA. Quite simply, auditors should not start with the premise that audit engagements for charities and non-profit organisations (NPOs) are inherently no-gos because their financial records are disorganised and charities often do not pay a reasonable fee, he said. Charities, too, have to meet auditors "more than halfway" by producing financial statements that are, at minimum, "auditable".

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