Ormsby and Rhodes’ feature in the Sunday Business Post
As one of Ireland’s longest established accounting firms, Ormsby & Rhodes in the heart of Dublin city has seen the not-for-profit (NFP) sector evolve to what it is today. It has advised clients in the sector, promoting astute corporate governance at all times. And as the sector suffered body-blows due to discrepancies with some charities in recent years, Ormsby & Rhodes underlined to its NFP clients the importance of internal audits, risk management and good governance.
“Failure to deploy strong corporate governance in an NFP or charity can be symptomatic of further weaknesses in internal controls, systems and governance procedures which ultimately may result in weak governance situations like those high-profile ones exposed in recent times,” said Aidan McCarthy, partner with Ormsby & Rhodes. “Depending on the size and financial resource of the NFP or charity, the annual statutory audit may be one of the main risk-management tools used to identify these weaknesses and suggest recommendations to deal with these risks. Where resources allow, we would be in favour of having an internal audit function that should be used to provide assurance on the effectiveness of an organisation’s risk management, internal controls and governance processes.”
But he said an internal audit must see every stone lifted and every lead followed. “Key to having an effective internal audit function is an ‘access-to-all-areas’ approach, asking the tough questions and challenging systems, controls and procedures within an organisation based on best practice. The internal audit function must remain independent and impartial from the management team. This ensures that their opinions and conclusions are objectively formed and communicated clearly.” And McCarthy believes that NFP culture is changing at a rapid pace in Ireland. “This is due to more structured oversight through the introduction of a Charities Regulatory Authority (CRA), changes imposed as a result of high-profile failures in the NFP sector, implementation of new accounting standards, NFP’s adopting Statements of Recommended Practice to improve their overall transparency and funding bodies requiring minimum standards to be attained by NFPs.” But he had a warning for those NFPs or charities which are still dragging their heels, “Putting off vital accounting, payroll and corporate governance reviews could result in too little, too late. Deferring these reviews could indicate risks already within.” It does, of course, take time and resources to ensure full compliance from NFPs and charities. As a result, there may be a danger that core functions of the entity are temporarily compromised. With that in mind, many groups in the sector have outsourced their payroll activities to offload a time-consuming task. Ormsby & Rhodes offers a professional outsourcing payroll service and Aidan McCarthy explains that the benefit to the NFP and charities which use it are many. He said: “(It guarantees) confidentiality within the organisation, improves time efficiency, makes up for a lack of in-house expertise, uses up-to-date technology to deal with complexity of the payroll, avoids errors and late payments/non-compliance and ensures data integrity and security. Also, it guarantees compliance with all aspects of employee tax returns and filings, ensuring pension and retirement benefits are taxed appropriately.” The NFP sector has made massive strides in a few short years with a renewed vigour to bring consistency and reliability to every aspect of the business. And McCarthy believes the more NFPs can do to improve transparency and accountability, the stronger the sector will continue to become. “There’s a large number of moves that can be taken, such as having a board of directors/ trustees that are fully committed, properly appointed, properly trained and balanced to having effective financial controls, budgets and planning tools, clear lines of communication and regular reporting. “The ability of a NFP to achieve full transparency and accountability will be a function of the strength of the board of directors and trustees, governance, volunteer support and the financial resources of the NFP.”