A Serious Incident - what is it and how to deal with one

We are all being advised to take extra care during the coronavirus pandemic. Not surprisingly fraudsters are taking advantage online by pretending to want to help. This raises the fraught issues as to how a Charity should deal with a serious incident.

What is a serious incident?

The Charity Commission will only want to be involved if the incident is one which they feel affects their oversight of charities. From the Charity’s point of view, it would be sensible to report an incident to the Charity Commission, if the Charity feels it may be serious. After all, if it turned out to be, and it had not been reported by the trustees, then questions could be asked as to why not. In any event any serious incident could affect the viability of the Charity and the willingness of the public to continue to support it.

Section 156 of the Act requires the Charity’s auditors to report…."matters of significance for the purposes of the exercise by the Charity Commission of its functions... under the Act”. If the incident relates to fraud, the misapplication of funds or theft, the report will usually involve the accounts being qualified. It is important that the auditor’s report does not precede that of the Trustees or vice-versa. The auditor will be filing the accounts and the Trustees need to see that their online report goes at the same time. I suggest that both the auditors and the Trustees agree to state, in their reports, that they have advised each other of the problem. If there appears to have been a delay by the Trustees, the Charity Commission might take the view that the Trustees have not acted quickly enough.

The Charity Commission definition of a serious incident

Serious incidents do not only include financial matters but can include: -           

Harm to personnel and/or the beneficiaries;

Damage to property;

Reputational damage.

As a rule of thumb, it appears that the Charity Commission will get involved in any event if the damage or loss exceeds £25,000 or 25% or more of the Charity’s income. Sadly, it is not always possible to assess the likely cost to the charity as the incident emerges. If the Trustees are concerned, they should always report the incident.

Reporting a serious incident

The Charity Commission require the report to be dealt with online. The report can be accessed via this  link. However, there is no ability to attach documents, so it as well to keep it straight forward so that the Charity Commission can make an appropriate assessment.