The Youth Challenge charity was recently found to be lacking in governance and internal controls following an inquiry by the Commissioner of Charities (COC). The Institute of Certified Public Accountants of Singapore (ICPAS) wishes to make some comments on this.
We would like to applaud the steps taken by the COC in commencing an inquiry and acknowledge the intention of the COC to safeguard the public interest in the realm of charitable organisations.
Charitable organisations should use donations and other income for the intended charitable purposes in an efficient and effective manner. Proper governance structures and internal controls will have to be implemented to help ensure this. It is critical that these governance structures and internal controls actually operate effectively in practice and this will entail investing certain resources.
Recent cases in the charitable sector emphasise the need for greater emphasis on having sound governance structures and internal controls in charitable organisations. Sound governance requires competent and committed board members who are able to provide independent oversight over management. Additionally, sound internal controls are necessary to help ensure the integrity of the financial reporting process, reduce the possibility of creative accounting practices, and minimise the risk of misuse of resources.
Proper governance comprises several elements, namely, the board, the external auditor and the internal auditor. The board of directors must take a proactive role in setting the proper tone and creating and maintaining a culture of integrity and sound ethics throughout the organisation.
By virtue of their nature, charities are publicly accountable and hence, must provide proper reporting of their activities. In this regard, the Institute has issued a Statement of Recommended Accounting 6 (RAP 6) Accounting and Reporting by Charities, which sets out recommendations on the way in which a charity should account for, and report on the resources entrusted to it and the activities, which it undertakes. Compliance with RAP 6 and the attendant disclosures required by the RAP will enable charities to be more transparent. The Institute would like to encourage all charities to adhere to the provisions in RAP 6 when preparing their financial report.
ICPAS, through its Corporate Governance Committee, strongly advocates best corporate governance practices and views the integrity and professionalism of directors, management, auditors and other intermediaries as paramount in ensuring good corporate governance. The Institute would like to categorically state that the accountancy profession in Singapore does not condone the making of misleading information by the directors of companies and expects its members to exercise the highest standards of integrity, skills and care in discharging their responsibilities.
The Institute of Certified Public Accountants of Singapore (ICPAS) is the national organisation of the accountancy profession in Singapore. With a membership of more than 17,800 members, ICPAS’ mission is to develop, support and enhance the integrity, status and interests of the accountancy profession in Singapore.
About ICPAS Corporate Governance Committee
The Corporate Governance Committee aims to draw on the experience of auditors, accountants, consultants and business people working in different fields to take a proactive role in the development, implementation and promotion of sound corporate governance. Its terms of reference include reviewing matters relating to corporate governance, conducting relevant research and consultation on corporate governance in a proactive manner, drafting of consultative papers and other legislative and regulatory proposals, and guidelines to members in the form of study reports, proposing changes to the Listing Rules and the Code of Corporate Governance and other related laws and regulations as appropriate and exchanging views with government, regulatory bodies, professional bodies and other relevant organisations on matters relating to corporate governance.
For more information, please contact:
Ms Catherine Chan
Institute of Certified Public Accountants of Singapore