• Accounting
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• July 17, 2026

Running a charity involves more than delivering good causes and supporting beneficiaries. Trustees also have important legal and financial responsibilities to ensure the charity is properly managed, compliant with regulations, and operating in the best interests of its objectives.

The Charity Commission for England and Wales expects trustees to maintain good governance, accurate records, and appropriate financial controls. However, many charities unintentionally make mistakes that can lead to compliance issues, additional scrutiny, or reputational damage.

At Adept Accountax, based in Mitcham and supporting charities across Greater London, understanding these common mistakes can help trustees improve their charity’s governance and avoid potential problems before they arise.

1. Failing to Submit Annual Returns and Reports on Time

One of the most common compliance issues is failing to submit required documents to the Charity Commission within the relevant deadlines.

Depending on the charity’s structure and income level, trustees may need to submit:

• Annual reports.
• Annual accounts.
• Annual returns.
• Other required information.

Late submissions can result in regulatory action and may affect the charity’s reputation with donors, funders, and the public.

Good practice tip: Trustees should maintain a calendar of important filing deadlines and ensure accounts and reports are prepared well in advance.

2. Poor Financial Record Keeping

Charities must maintain accurate and complete financial records. Poor record keeping can make it difficult for trustees to demonstrate that funds are being managed properly.

Common issues include:

• Missing invoices or receipts.
• Incomplete records of income and expenditure.
• Failure to separate restricted and unrestricted funds.
• Lack of supporting documents for financial transactions.

Proper bookkeeping and financial controls help trustees monitor the charity’s financial position and meet reporting requirements.

3. Not Having Appropriate Financial Controls

Trustees have a responsibility to protect charity funds from errors, misuse, or fraud.

Common weaknesses include:

• One person controlling all financial activities.
• No approval process for payments.
• Lack of regular bank reconciliations.
• Poor monitoring of expenses.

Charities should establish clear procedures for approving payments, handling cash, managing bank accounts, and reviewing financial information.

4. Mismanagement of Restricted Funds

Restricted funds must only be used for the purpose specified by the donor or funding provider.

A common mistake is using restricted funds to cover general charity expenses because the charity is experiencing cash flow difficulties.

For example: A charity receives a grant specifically for a youth education project but uses part of the money to pay unrelated office expenses.

Using restricted funds incorrectly can create serious governance issues and may require trustees to take corrective action.

5. Lack of a Clear Reserves Policy

A reserves policy helps trustees understand how much money the charity should retain to manage future risks.

Some charities make the mistake of:

• Holding excessive reserves without explanation.
• Having no documented reserves policy.
• Using reserves without proper trustee consideration.

Trustees should regularly review the charity’s reserves position and explain their approach clearly in the annual report. (See our guide: [Charity Reserves Policy Explained].)

6. Failure to Manage Conflicts of Interest

Trustees must always act in the best interests of the charity. Conflicts of interest can arise where a trustee’s personal, family, or business interests could influence charity decisions.

Examples include:

• Paying a trustee for services.
• Awarding contracts to a trustee’s business.
• Decisions involving family members.

Trustees should declare conflicts, record them properly, and ensure affected trustees do not influence relevant decisions. (See our guide: [Can Trustees Be Paid?].)

7. Not Understanding Trustee Responsibilities

Some trustees believe their role is mainly to support fundraising or attend meetings. However, trustees have legal responsibilities for the charity’s management and governance.

Trustees must:

• Ensure the charity operates in line with its objectives.
• Protect charity assets.
• Manage resources responsibly.
• Comply with legal and regulatory requirements.
• Act in the charity’s best interests.

Trustee training and regular reviews can help ensure everyone understands their responsibilities.

8. Poor Governance and Lack of Trustee Records

Good governance requires proper documentation of important decisions.

Common issues include:

• Not keeping detailed meeting minutes.
• Failing to record decisions and reasons.
• Lack of written policies and procedures.
• Infrequent trustee meetings.

Accurate records demonstrate that trustees have acted responsibly and followed proper decision-making processes.

9. Incorrect Charity Accounts and Reporting

Charity accounts must be prepared in accordance with the applicable accounting requirements, including the relevant requirements under the Statement of Recommended Practice (SORP) where applicable.

Common mistakes include:

• Incorrect classification of income and expenditure.
• Poor treatment of restricted funds.
• Missing disclosures.
• Inaccurate trustees’ reports.

Professional advice can help ensure charity accounts are accurate and compliant.

10. Failing to Seek Professional Advice When Needed

Charity regulations, accounting requirements, and tax rules can be complex. Some charities delay seeking advice until a problem has already occurred.

Early professional support can help trustees:

• Improve financial controls.
• Understand reporting obligations.
• Manage VAT and tax issues.
• Prepare compliant charity accounts.
• Strengthen governance procedures.

How Trustees Can Avoid Common Mistakes

Trustees can reduce compliance risks by:

• Keeping accurate financial records.
• Reviewing charity policies regularly.
• Maintaining proper meeting records.
• Understanding restricted and unrestricted funds.
• Managing conflicts of interest appropriately.
• Preparing accounts and reports on time.
• Seeking professional advice where necessary.

Need Help With Charity Compliance in Mitcham & Greater London?

Managing charity responsibilities can be challenging, particularly for trustees who are giving their time voluntarily while ensuring the organisation meets its legal obligations.

At Adept Accountax Limited, we support charities across Mitcham, Greater London and the wider UK with charity accounts, financial reporting, VAT advice, governance support, and compliance requirements.

Whether you need help preparing charity accounts, reviewing your financial processes, or understanding your responsibilities as trustees, our team can provide practical guidance tailored to your organisation.

Contact Adept Accountax Limited today if you would like support with your charity’s accounting and compliance needs.

Adept Accountax Limited | Charity Compliance & Governance Advisers in Mitcham, Greater London Helping charities manage their finances with confidence. 📞 Call us today | 📧 Get in touch online

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Frequently Asked Questions

What happens if a charity misses its filing deadline with the Charity Commission? Late submissions can trigger regulatory action, be flagged publicly on the charity’s Commission record, and affect confidence among donors and funders — it’s best to set reminders well ahead of deadlines rather than risk this.

Can trustees be held personally responsible for compliance mistakes? Trustees can face regulatory scrutiny and, in serious cases involving mismanagement or misuse of funds, may be required to take corrective action or face personal liability, depending on the circumstances — this is why proper financial controls and record-keeping matter.

What’s the most common charity compliance mistake? Poor financial record keeping and late annual filings are among the most frequent issues we see, often because smaller charities are run by time-poor volunteer trustees without dedicated finance support.

How can a charity fix mismanaged restricted funds? Trustees should identify the issue promptly, document what happened, and take corrective action — such as reallocating unrestricted funds to cover the shortfall — and may need to notify the funder or the Charity Commission depending on the severity.

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This article is intended as general guidance and does not constitute professional or legal advice. Contact Adept Accountax for advice specific to your charity’s circumstances.