Independent Examination and Accounting for Charities
An audit and an independent examination are both external reviews of a charity’s accounts, but they’re not the same.
All registered charities must produce an annual report and accounts each year. However, when a charity’s annual income exceeds £25,000, an audit or independent examination is also required.
It is the responsibility of the trustees to appoint a suitably qualified accountancy firm to carry out an audit or independent examination of the accounts. This ensures that the charity’s supporters, beneficiaries and members of the public have assurance that appropriate accounting records have been kept.
Full Audit or Independent Examination of the Accounts?
Under certain circumstances, an alternative to an audit is an independent examination, where minimal external scrutiny is required. Broadly speaking, an independent examination is for charities whose gross income is between £25,000 and £1 million. If the charity’s gross income exceeds £250,000 then gross assets (fixed assets plus current assets) must be valued at £3.26 million or less.
Many trustees opt for an independent examination – where possible – because it is simpler and costs less than an extensive audit. However, trustees will not be able to choose an independent examination is for the charity’s governing document, a funder or the Charity Commission requires an audit to be carried out.
As experts in charity and not-for-profit accounting, we offer a range of services including independent examination of accounts.
Next Step: Call our Independent Examination Specialists
To discuss our independent examination and not for profit accounting services, please call us today. Alternatively, book a free initial consultation with one of our charity accounting and audit experts.
FAQs
An Independent Examination is a review of a charity’s accounts to make sure they are accurate and meet legal requirements. It’s less detailed than an audit.
Charities with annual income between £25,000 and £1 million need an Independent Examination.
An audit is more thorough and expensive. An Independent Examination is simpler and cheaper but still ensures the charity’s accounts are correct.
An Independent Examiner should be a qualified accountant or someone with experience in charity finances.
They review the charity’s accounts, check for accuracy, and make sure everything is legal and correct.
Time scales vary depending on the charity’s size. It’s quicker than an audit.
You’ll get a report confirming whether the charity’s accounts are accurate and meet the rules.
Yes, as long as the examiner is qualified.
Independent Examinations are cheaper than audits. The cost depends on your charity’s size and complexity.
You need one every year if your charity has income over £25,000.