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Charity audits - tips and thresholds

Preparing for an audit doesn’t need to be a challenge. The right amount of planning can make the process easier, quicker, and cause the least amount of disruption to your organisation.

If you are not sure what type of audit your charity needs to have, here is a reminder of the thresholds:

• Charities with an annual income above £25,000 need to have their accounts Independently Examined.
• For charities with income over with income over £1m or with gross assets over £3.26m and income over £250,000, a full audit is required.
• Otherwise, if your

• Gross income is over £250,000 an Independent Examination by a member of an approved professional body is required.
• Gross income is under £250,000 but over £25,000 an Independent Examination by an appropriate person is allowed.
• Gross income less than £25,000 there is no statutory requirement for an Independent Examination.

Some charities choose an audit when it is not a statutory requirement. They believe it offers more value and demonstrates a greater accountability and transparency to donors and funders. In such cases it might not necessarily be required on an annual basis.

Steps to an efficient audit

1. Discuss your need for assistance with your auditor or independent examiner. Agree tasks and timescales. Is there anything they should be aware of that could affect the audit process.
2. Allocate the responsibility to someone within your charity with regard to planning and handling the audit. Have you allowed for work schedules and holidays amongst your staff. 
3. Aim to keep accounting records up to date. Not only will this help alleviate pressure nearer the audit it will also save time and keep disruption to a minimum.
4. We recommend keeping an auditor file for documents such as assets, leasing arrangements, contracts with major grant funders and suppliers etc.
5. Be aware of all necessary accounting standards to ensure your records are compliant. This also goes for any legal or regulatory requirements. 
6. If your charity has been audited previously, any changes since that time will need to be considered. These could be new projects requiring investment or government grants received by your charity.
7. Also, most previous year end audits will have adjustments made and management letter points. Have these been implemented?
8. Communication is key to the whole process and will help minimise the pressure of the audit. A pre-planning meeting before the audit will help sort out any potential problems or delays.

This list is not exhaustive and there will most certainly be other matters to consider, depending on your charity’s situation. Suffice it to say these are the key areas you should focus on.

We have many years’ experience of acting as both auditors and independent examiners for charities so if you need advice or have any questions, please let us know.

22/03/2023