SORP risk management compliance statement

Charity trustees must meet the SORP compliance statement.

As a minimum, the statement in the trustees report could say:

"The trustees have assessed the major risks to which the charity is exposed, in particular those related to the operations and finances of the Trust, and are satisfied that systems are in place tomanage our exposure to the major risks".

However, this is a bland and uninformative statement which, even if complying with the letter of the SORP, goes against the spirit of openness of reporting. Moreover, the trustees should have internal documentation showing they have in fact undertaken a risk assessment. They would be advised to have this independently confirmed.

A more expansive and helpful heading "Governance and internal control" might contain a statement outlining and explaining:

• The trustees' responsibilities
• What they have done in the year to ensure the charity's objectives have been effectively met
• What systems of internal controls are in place
• How controls are reviewed
• The adoption of a risk management process, which they have put in place with the assistance of their auditors
• Linking the risk statement to the reserves policy describing if the charity is under reserved what strategies are in place to resolve the problem or equally if over reserved. Note if the Charity seems over reserved but in reality has either a capital commitment or needs to balance immediate beneficiary needs with those in the future then these reasons should be disclosed

Further resources

• 'Charities and Risk Management' from the Charity Commission.