Changes to the Charity Audit Thresholds
The thresholds at which a charity is required to have its annual accounts audited is changing and will apply to charities whose accounting periods ended on or after 31 March 2015.
Existing regulations specify that the level of external scrutiny required on a charity’s financial statements is dependant on its level of income and expenditure, and its total assets. For accounting periods ending before 30 March 2015 these thresholds were:
- For charities with gross income ≤ £25,000 – no requirement for external examination
- For charities with gross income > £25,000 but ≤ £250,000 – external scrutiny is needed but trustees may choose between an independent examination or an audit
- For charities with gross income > £250,000 but ≤ £500,000 and gross assets ≤ £3,260,000 – trustees may choose between an independent examination or an audit (however, the independent examiner must belong to a recognised body)
- For charities with gross income > £500,000 or gross income > £250,000 and gross assets > £3,260,000 – the accounts are subject to a statutory audit
The new regulations that come into force on 31 March 2015 apply to England and Wales only and will be applicable to all charities whose accounting years ended on or after 31 March 2015. The significant changes include:
- an increase in the income threshold for audit from £500,000 to £1m (the same threshold also applies to aggregate group income for parent charities);
- an increase in the preparation threshold for group accounts from £500,000 to £1m; and
- the addition of the Institute of Financial Accounts (IFA) and the Certified Public Accountants Association (CPAUK) to the list of recognised bodies for independent examination.
The new regulations will allow the trustees of charities with gross income between £500,000-£1m to consider whether they wish for the financial statements to continue being audited in future periods, or if independent examination would be more appropriate.
Date: 22nd July, 2015
Articles from this Author
24th July, 2018
Academies Accounts Direction 2017/2018 (AAD)
9th February, 2018
Guidance for charities regarding the changes to the automatic disqualification of trustees rules
30th November, 2017
Legislative changes affecting the Charitable Incorporated Organisation (CIO)
14th November, 2017
Updated guidance for independent examiners (CC32)
Season’s Greetings and Happy New Year from everyone at Mercer & Hole pic.twitter.com/x4o1o9tbWP
For the latest Mercer & Hole news, visit our LinkedIn page mercer-&-hole