UPDATED CHARITY COMMISSION GUIDANCE ON INVESTMENTS
The Charity Commission has published renewed guidance on charities and investments, bringing it up to date for the modern era. Their Press Release states:
“The guidance (known as CC14) has been redesigned to offer greater clarity and to give trustees confidence to make investment decisions that are right for their charity. The language used is clearer and the structure has been updated so that it is shorter and easier to use, and trustees can find the information they need more quickly.
It reflects a significant High Court judgment on charity trustees’ investment duties (the ‘Butler-Sloss’ case). Trustees can have confidence in the decisions they make when following the guidance, knowing it is up to date and reflects the relevant law
The guidance:
» Includes examples of various issues which may be relevant for trustees to consider when making investment decisions, such as the potential for an investment to conflict with the purposes of the charity, or the reputational impact of an investment decision;
» Lists steps trustees ‘must’ take to be compliant with the law and those trustees ‘should’ do which are strongly recommended as best practice but not legally required;
» Explains that acting in the best interests of a charity is about ensuring that above all else any decision furthers its purposes. It also warns trustees to not allow personal motives, opinions, or interests to affect the decisions they make; and
» Incorporates previously separate guidance on social investment and no longer uses terminology that could get in the way of trustees’ understanding, such as ‘ethical investment’, ‘mixed motive investment’ and ‘programme related investment’.”
CHARITY COMMISSION GUIDANCE ON THE USE OF SOCIAL MEDIA
The Charity Commission has published guidance regarding the use of social media and indicates that there are risks involved, which trustees should plan for. Their Press Release states:
“The new guidance is clear that charities using social media should have a social media policy in place and should ensure the policy is followed. The regulator’s casework has revealed a knowledge gap. Trustees are not always aware of the risks that may arise from using social media, meaning that some do not have sufficient oversight of their charity’s activity, leaving them and their charity vulnerable.
The guidance aims to help trustees understand these risks, how their legal duties apply, and what to consider if issues arise and
it:
» Makes clear that the regulator does not expect that every charity will involve trustees in the day-to-day running of the charity’s social media but that trustees must understand their legal responsibilities even if delegating tasks;
» Sets out the expectation that charities using social media should have a policy in place to explain how using social media will help deliver the charity’s purpose and should include the charity’s own guidelines, such as those on the conduct of trustees, employees and volunteers using social media on the charity’s behalf;
» Contains an easy-to-use checklist to help trustees and senior employees have informed conversations on what the right policy for them looks like;
» Says charities should have guidelines to manage the risk that content posted by individuals connected to the charity in their personal capacity, particularly those who are high profile like CEOs, may negatively impact the charity by association. It also makes clear that trustees, employees and others have the right to exercise their freedom of expression within the law; and
» Signposts organisations and resources that can help trustees if they want to improve their social media skills.”
ACADEMIES ACCOUNTS DIRECTION
The Education and Skills Funding Agency (“ESFA”) has issued the Academies Accounts Direction 2022 to 2023, which can be
obtained from their website.
In terms of “What’s New”, it states that the 2022 to 2023 Direction does not introduce any new requirements, with the changes providing clarification on existing requirements. The changes summarise that these:
» Clarify how trustees should use the Direction;
» Clarify expectations for interim arrangements, in the absence of key signatories; Update feedback on non-compliance with the Direction and update the themes arising from ESFA’s assurance work;
» In response to school buildings’ safety risk, enhance the Direction’s content and:
ᴏ Clarify that the trustees’ report on principal risks and uncertainties should consider those risks impacting on trustees’ responsibilities to ensure the trust’s estate is safe, well maintained and complies with relevant regulations;
ᴏ Clarify that the review of value for money statement encompasses estates safety and management;
ᴏ Suggests that accounting officers should consider demonstrating how they have effectively used relevant funding to ensure the trust’s estate is safe, well-maintained, and complies with relevant regulations, as one of their value for money examples; and
ᴏ Clarify that the statement on regularity, propriety and compliance encompasses estates safety and management;
» Update the guidance on the treatment of loans;
» Remind academy trusts of the need to separately disclose material income sources; and
» Clarify that teaching assistants are categorised as support staff in the staff costs note.
Regarding school buildings’ safety risk, the Department for Education has published guidance on the identification of reinforced autoclaved aerated concrete (“RAAC”) in education settings, which is available on their website. As this was a developing issue during August 2023, the existence of RAAC and the consequences of this having been used in construction were known prior to 31 August 2023.
Should an academy trust identify the existence of RAAC on the trust’s estate, as this was a known problem at the end of the reporting period, this should be treated as an adjusting subsequent event, irrespective of when this was identified.
As RAAC was used in the construction industry from the 1950’s to the 1990’s, consideration of this area should be regarded as a key risk when performing the audit of an academy trust’s financial statements for the year ended 31 August 2023, unless it is clear that the trust’s estate has been entirely constructed in the last thirty years.