Month: February 2018

Fewer than one in four auditors alerted the charity regulator to matters of material significance identified in their charity audit reports, according to a new review. The Charity Commission has found that, of the 114 auditors who gave audit opinions containing information they were required to report to the regulator in the six months to October 2017, only 28 contacted the Commission.

The Commission says it is now working with the accountancy profession to raise auditors’ awareness of requirements and address this under-reporting, which it describes as raising a ‘significant concern’ about the adequacy of reporting to the Commission by auditors.

The regulator undertook the review to test compliance with rules that came into force from May 2017, extending the list of reportable matters to include modified audit opinions, such as paragraphs about an emphasis of matter or a material uncertainty regarding going concern – meaning there are doubts as to the charity’s ability to remain solvent.

The new rules are designed to help the regulator intervene in a more timely way, notably where charities face financial difficulty putting their future at risk. They follow the Public Administration and Constitutional Affairs Select Committee’s inquiry into the collapse of Kids Company, which recommended clearer guidance to auditors on the issues regulators expected them to report.

Of the 28 auditors who made a required report to the Commission, only 6 did so promptly, or within one day of signing the audit opinion; 3 waited more than two months to alert the Commission.

Michelle Russell, Director of Investigations and Enforcement at the Charity Commission, says:

Auditors provide vital reassurance that a charity’s accounts are true and fair and by extension in helping ensure charities are transparent and the Commission can regulate effectively. So it is very important that accountancy professionals understand the requirements on them in auditing charities’ accounts.

This review shows that, at this time, too few auditors are complying with their statutory duty to report matters of material significance to us as soon as they identify them. This potentially puts charities at risk. It is important that we identified and responded to this quickly and so we are working with the accountancy profession to help raise awareness of auditors’ reporting requirements and ensure they meet them.

A review published last year analysed the reasons auditors gave modified audit opinions in 2016; these included concerns, on the part of the auditor, that charities did not have sufficient evidence to support their stated income or expenditure.

The Commission has been liaising with both the Institute of Chartered Accountants in England and Wales (ICAEW) and ACCA, the global body for Professional Accountants, about the findings from the report.

ACCA has welcomed the report, saying that “there is a responsibility on the profession to uphold the highest of standards” and that it would work with the regulator to “ensure the value of audit and all reporting for the charity sector remains a top priority”.

Independent examiners were not included in this review, as the revised directions and guidance that referred to their duty to report matters of material significance to the UK regulators, only took effect from 1 December 2017. The regulators published updated guidance for independent examiners in September 2017.

Ends

Arts Minister Michael Ellis has placed a temporary export bar on The Destruction of Pharaoh’s Host, by the British artist John Martin (1789-1854), to provide an opportunity to keep it in the country.

The watercolour is at risk of being exported from the UK unless a buyer can be found to match the asking price of £1,509,102.

The drawing illustrates the Biblical story (Exodus 14) of Moses releasing the waters of the Red Sea, after they had miraculously parted to allow the fleeing Israelites to cross, thereby drowning the pursuing Egyptian army.

Employing a panoramic composition to magnificent effect, Martin plays with the scale of the figures and the scenery to maximise the epic nature of the drama. The emotional force of this scene of deliverance and retribution is heightened by a blood red sunset below a sweeping black sky.

Although Martin is best known for his spectacular oil paintings and mezzotints (a tonal print technique that was ideally suited to capturing his bold use of light and shade for dramatic effect) illustrating John Milton’s Paradise Lost and the Bible, he also created a series of framed ‘exhibition watercolours’, which in scale and visual impact were intended to compete for attention and patronage with oil paintings.

Martin’s mezzotints of Biblical subjects, such as The Destruction of Pharaoh’s Host published in 1833, were hugely popular and influential with admirers including Charles Dickens and the Bronte sisters who grew up with them on the walls of their father’s parsonage.

Martin’s large-scale watercolour treatment of the same subject from three years later was intended to capitalise on his popular success, and The Destruction of Pharoah’s Host demonstrates his bold use of the medium in the eye-catching brightness of the colours, with the tonal range expanded through extensive use of black pigment, bodycolour, and gum arabic.

Martin’s artistic reputation did not endure – despite the influence he played in shaping the epic scale and grandeur of Biblical and historical epics in films by directors like Cecil B. DeMille – as his standing suffered from the disapproval of the art critic John Ruskin and the artist’s focus later in his life shifted to planning ambitious engineering schemes to deliver clean water and an efficient sewage system to London.

The subsequent and enduring shift in taste away from the use of watercolour for grandiose narrative subjects, allied to a longstanding critical downplaying of the significance of the medium to British art, meant that Martin’s stature as a watercolourist was long overlooked, until interest in his work began to revive in the early 1950s.

Martin’s importance is now more widely recognised and celebrated, and the ambition, boldness and grandeur of The Destruction of Pharoah’s Host exemplifies his unique contribution to British watercolour history.

Arts Minister Michael Ellis said:

This incredibly dramatic picture captures the imaginative and apocalyptic subjects for which Martin is best known.

I hope it can remain in the UK, where it can be admired and studied for many years to come.

The decision to defer the export licence follows a recommendation by the Reviewing Committee on the Export of Works of Art and Objects of Cultural Interest (RCEWA), administered by The Arts Council.

RCEWA member Lowell Libson said:

Working in watercolour played a significant part in Martin’s art throughout his career although he is now best remembered for his exhibition works in oil. The Destruction of Pharaoh’s Host not only demonstrates Martin’s mastery of the medium but underlines how he employed it to achieve emotional and dramatic effects of a subtlety which were impossible in his larger scale oil paintings. The Destruction of Pharaoh’s Host numbers amongst the greatest of Martin’s watercolours.

The RCEWA made its recommendation on the grounds of the picture’s outstanding significance in the reassessment of John Martin – the most popular artist of his day, dismissed by the art establishment and ignored for almost a century – whose influence on the development of epic, visionary landscape painting, both in Britain and in America, is now widely acknowledged.

The decision on the export licence application for the picture will be deferred until 21 May. This may be extended until 21 September if a serious intention to raise funds to purchase it is made at the recommended price of £1,509,102.

Organisations or individuals interested in purchasing the picture should contact the RCEWA on 0845 300 6200.

An image of the picture can be downloaded via our flickr site.

ENDS

Notes to editors

1. Details of the picture are as follows:
   Watercolour by John Martin (1789-1854), The Destruction of Pharaoh’s Host, signed and dated: ‘J. Martin/1836’ (lower right). Pencil and watercolour with gum arabic heightened with body colour and with scratching out; 23 x 33 ¾ in. (584 x 857 mm).
2. Provenance: (Probably) J.E. Jesse, by 1876; with Agnew’s, London; with Leger & Son, London, by September 1954, sold in or after 1958 to George Goyder; Sotheby’s, London, 11 July 1991, lot 192, where purchased by private owner (sold for world auction record price for watercolour by this artist £107,800); Christie’s, London, 3 July 2012, lot 139 (est. £300,000-500,000, sold for £758,050, also world auction record).
3. The Reviewing Committee on the Export of Works of Art and Objects of Cultural Interest is an independent body, serviced by The Arts Council, which advises the Secretary of State for Digital, Culture, Media and Sport on whether a cultural object, intended for export, is of national importance under specified criteria.
4. The Arts Council champions, develops and invests in artistic and cultural experiences that enrich people’s lives. It supports a range of activities across the arts, museums and libraries – from theatre to digital art, reading to dance, music to literature, and crafts to collections. www.artscouncil.org.uk.