Independent Examinations
As specialists in the not-for-profit sector, we understand that most charitable organisations are started by individuals who have a personal understanding of, or connection to, the beneficiaries they are trying to help. For that reason, ensuring that a charity’s valuable funds go to where they are intended is vital for charity trustees.
Where a charity has gross income of more than £25,000 but less than £1million and isn’t required to have an audit by its governing document, the terms set by a funder or by the Charity Commission, the trustees may be able to elect to have an independent examination of the charity’s accounts instead of an audit.
Opting for an independent examination saves on compliance costs, thereby maximising the amount of funds available to support the charity’s objectives.
Who can perform an independent examination?
For charities with gross income in excess of £250,000 the independent examination must be performed by an independent person who is a member of one of the accountancy bodies listed in the Charities Act. Where gross income is below £250,000 the Charity Commission still recommends appointing an examiner who is a member of one of the accountancy bodies listed in the Charities Act where accruals accounts are prepared, due to the competencies required to understand the applicable accounting standards and the requirements of the Charity SORP. As a firm of Registered Auditors, with charity specialists, we are ideally placed to perform independent examinations.
What is involved in independent examination?
The procedures that must be undertaken within an independent examination are set out within the Charity Commission’s guidance ‘Independent examination of charity accounts: Directions and guidance for examiners (CC32)’. The overall role of the independent examiner is to provide scrutiny on the accounts, but a lesser extent of scrutiny than is involved in an audit engagement and therefore a lower level of assurance is obtained.
The examiner makes a report to the charity trustees as a result of their work commenting on three areas:
- whether the accounting records were kept;
- whether the accounts agree with those records; and
- whether the format of the accounts is correct.
The independent examiner’s report is included within the accounts of the charity in the same way that an audit report would be.
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