31 March 2015 brought the introduction of the increased charity audit thresholds: more charities are now exempt from having an audit if their gross income is less than £1 million and gross assets fall below £3.26 million. However, in some circumstances charities are still required to carry out an audit even if they meet the above criteria.
Instances where an Audit is still required
Although many charities are now relieved from this regulatory burden, it is important to be aware of the circumstances where an audit may still be required. These include:
- Grant funders and banks: Your funder or bank can still request for you to carry out an audit. This will be stated in your agreement or contract
- Certain charity types: By law, some charities are obliged to have an audit carried out. This includes ‘Registered Social Landlords’ and ‘NHS charities’
- Governing Document: Although not required by law, some governing documents request that the charity carries out an audit. If you fall under this bracket and no longer wish to have this obligation, it is important you look at updating your document
- Scotland: The thresholds for Scotland, and English charities who are based in Scotland, are still the same as the old legislation
If the above points are not applicable to your charity, you will fall under the charity audit exemption threshold. However, charities who are relieved from audits may still be required to carry out an ‘Independent Examination’.
An Independent Examination is less detailed and less extensive than an audit, but it still helps to provide assurance and confidence in the charity sector. In the case of an examination, a review of the charities accounts will take place to ensure that the accounts are reliable and correctly prepared.
Charities that have an income, which is more than £25,000, by law, must have an independent examination carried out by a qualified individual. By having an independent examination carried out, both the public and charities are at benefit. For charities, the examination is less time consuming and more price efficient than an audit, whereas the public can still be confident due to the transparency of the report.
Charities that have a gross income of less than £25,000 will not need to carry out an independent examination or an audit.
If you have any questions or require advice on charity audits and independent examinations, please contact Suda Ratnam at email@example.com