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Audit Services For Registered Charities


Charities play a vital role in society by providing support and resources to various causes, ranging from health and education to social welfare and environmental conservation. To maintain transparency, accountability, and public trust, many charitable organisations in the United Kingdom undergo audits of their financial records. However, not all charities are obligated to conduct audits. 

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When Are UK Charities Required to Have an Audit?


Charities are classified into different tiers based on their income and structure. The Charities Act 2011 and the Charities (Accounts and Reports) Regulations 2008 outline the thresholds that determine whether a charity must undergo an audit or have an independent examination of their financial statements.


  • Charities with Income Below £25,000: Charities with an annual income of £25,000 or less are not obligated to have an audit. However, they are still required to maintain proper financial records and prepare an annual report. They can however opt for an independent examination.
  • Charities with Income Between £25,000 and £1 million: Charities falling within this income bracket have a choice between an audit and an independent examination. An independent examination involves a review of the financial statements by a qualified person who assesses whether the accounts comply with legal requirements.
  • Charities with Income Above £1 million: Charities with an annual income exceeding £1 million are usually required to have a full audit of their financial statements. The audit is conducted by a registered auditor who provides an opinion on the financial statements' accuracy and compliance with regulations.
  • Charities with income over £250,000 and assets exceeding £3.26m: Charities with assets exceeding £3.26m before liabilities are legally required to have a full audit of their financial statements. The audit shall be conducted by a registered auditor to provide an opinion on the accuracy of their financial statements and compliance.
  • Other instances of audit requirement: In addition to the legal requirements for audits, charities may also be obligated to have their accounts audited if it is required by their governing document, or due to a condition imposed by a funder as a condition of receiving funding. This is because audits provide assurance to donors, volunteers, and other stakeholders that the charity is being financially responsible and accountable.

Exceptions and Considerations:


  • Exempt Charities: Certain types of charities, such as charitable companies and charitable incorporated organisations (CIOs), are exempt from the audit requirement. Instead, they must prepare and submit accounts that meet specific criteria set out for registered companies.
  • Public Benefit Corporations: Charities that are also registered as public benefit corporations might be subject to additional reporting requirements and scrutiny to ensure they are fulfilling their social and public benefit objectives.
  • Reporting Thresholds: Charities may experience fluctuations in income from year to year. It's important to monitor income levels and understand that the audit requirement can change based on those levels.
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Benefits of Auditing:


  • While auditing might be a legal obligation for some charities, it offers several benefits beyond compliance:
  • Enhanced Credibility: An audit enhances a charity's credibility and transparency, reassuring stakeholders and donors about the proper management of funds.
  • Financial Accuracy: Audits help identify errors or irregularities in financial records, ensuring accuracy in reporting.
  • Governance Improvement: The audit process can highlight weaknesses in internal controls and governance practices, prompting improvements.
  • Fraud Detection: Auditors can uncover potential instances of fraud or mismanagement, helping charities take corrective actions.

 

UK charities operate within a regulatory framework designed to ensure accountability and transparency. The requirement for an audit depends on a charity's income level, with smaller charities benefiting from an independent examination as a less rigorous alternative. By understanding the audit thresholds and their benefits, charities can uphold their commitment to responsible financial management and maintain public trust in their operations.

Why choose us:


Partnering with an independent auditor that specialises in the charity sector is a great way to ensure that your financial affairs are in order. They will be familiar with the unique challenges that charities face and will be able to provide practical advice and assistance.


At Friend Partnership, we offer a range of services for the charity sector, including audit, statutory accounts preparation, taxation, and payroll. Our experienced and friendly team of specialists understand the importance of helping charities to manage and mitigate risk. We are committed to providing our clients with the highest quality of service and support.


If you are a charity looking for an independent auditor, you can get in touch with us to discuss your specific needs and provide you with a proposal for our services.

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