Of the “Big Four” firms that The Straits Times contacted, only Deloitte & Touche are not cutting down on their charity clients while both Ernst & Young and PwC gave ambiguous answers. KPMG did not reply.

In light of the NKF saga, charities are now brought to closer scrutiny than other firms. Charities are rated as high-risk clients where auditors have to put in extra care and effort. Therefore, auditors are increasingly hesitant to take on charity jobs because the money is not worth the risk and increased scrutiny and expectations.

The following are some of the key rules that will govern Institution of a Public Character (IPCs) :

1. IPCs have to ensure that funds are used according to donors’ wishes and for the specific purposes communicated to them when donations were solicited.
2. IPCs have to ensure that information given to donors. Potential donors and the public does not contain any misrepresentation or material omission that will lead to a conclusion of misrepresentation
3. All IPCs have to declare their conflict of interest policy in their annual report
4. IPCs have to ensure that total expenses incurred on fund-raising appeals in a financial year do not exceed 30  per cent of total donations collected though such appeals n that year. Auditors must certify that the IPC has met this 30/70 rule as part of their annual audits.
5. All IPCs with total annual incomes of $10 million or more have to comply with nationally recognised Financial Reporting Standards.]
6. IPCs with total annual incomes of $10 million or more have to post their annual reports and audited financial statements online.

Extracted from The Straits Times Monday, June 26 2006

Updated July 2006