Charity sector Budget reaction and ongoing implications of Covid-19 on governance

Over the last twelve months, the government have relied heavily on the sector to support mental health, deliver food and medicine. Generally, the sector feels that not enough has been done by the government to keep the services running and those who need the most support have been ignored and left out of the Budget. Many organisations are facing financial difficulties as they continue to support those in need.

Starting the new year in lockdown has brought additional uncertainty to the charity and not for profit sector. We can, however, look back at 2020 and learn from it. Covid-19 has ongoing implications in terms of governance, so it is important that organisations look forward with resilience.

Organisations are faced with making major decisions in all areas, staffing, furloughing, financial and operational. Governance arrangements need to be robust enough to make such critical business decisions. Below we address a few areas which may need attention at this challenging time.

Are the right people making the business decisions?

The remote working environment has physically pushed staff apart. Many who once worked together in one location find themselves working from home with a high degree of autonomy. Despite this new way of working, standard approval processes should still be followed. It is crucial that the right people are brought together (even virtually) to make the right decisions. Discussions should still be minuted and evidence of decisions being made should still be retained. Video recording of virtual meetings is a very useful tool in the remote working environment.

Compliance and assurance

Financial regulations and systems should still be complied with, even if the organisation is working remotely. If anything, if resources are tight, then the need for internal scrutiny should be much higher. Decisions being made now could have a longer term impact on the organisation.

During these difficult times it may be tempting to reduce the level of independent assurance. If this is the route being taken to keep costs down, then the impact of this in terms of risk needs to be assessed. Saving costs in this area could actually increase risks, result in higher costs and could actually damage reputation if errors are missed.

Post Covid-19

Many organisations will have changed significantly since the start of the first national lockdown in March 2020. It is important to look back and learn from experiences, assess what has worked well and what hasn’t throughout the crisis so far. It even more important to look to the future. Many of the changes that organisations have had to make over the last 12 months, may actually be here to stay. Some changes will be considered to be enhancements of practices from the past. Organisations need to capitalise on these gains and ensure that they are formally documented as future forms of governance and organisational structures.

The next step

Should you have any queries in relation to any of the above, please contact Kay Flevill or your your usual UHY adviser. 

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