Small charities, defined as those with incomes below £25,000 a year, make up two thirds of all charities registered with the Charity Commission.
They are required to provide the regulator with basic financial information on income and expenditure.
A sampling exercise conducted by the Charity Commission found 38% of small charities were filing inaccurate data.
“Not providing accurate financial information is misleading and can have an impact on public trust,” said Nigel Davies, head of accountancy services at the commission.
“People want to know how charities spend their money; so this result is clearly not good enough.”
The sampling exercise found that performance was better among larger charities.
Those with incomes over £500,000 had a 95% accuracy rate for their balance sheet figures, although income and expenditure analyses were just over 80% accurate.
Earlier this month, the Charity Commission reprimanded the sector for failing to use their accounts and annual reports to communicate clearly with the public.
