New charity audit threshold
The gross income requirement for audit has increased from £500,000 to £1,000,000. The asset threshold has remained unchanged. Therefore, as an example, a charity with an income over £250,000 but with gross assets of £3,260,000 will still require an audit under the new rules.
The Charity Commission has released updated guidance which is available to download from here.
Reduced disclosure now a possibility for charities
In addition to the exemption from carrying out an audit, this also means that charities falling outside the audit threshold will benefit from reduced disclosure requirements. Perhaps most notably, group accounts would then fall into this reduced disclosure.
If a charity falls out of needing an audit, it will also fall out of the definition of a ‘large charity’ and the additional reporting requirements will apply for periods ending on or after 31 March 2015.
New reporting requirements if you still need to carry out an audit
For those who are not exempt from carrying out an audit, the 2008 Regulations (Part 5) sets out the requirements for the form and content of a charity’s annual report. There are also further reporting requirements for an auditable charity.
Our thoughts
For trustees of charities with income under £1 million and looking for the peace of mind, increased assurance and credibility, the option of carrying out a voluntary audit still remains. We believe that many charities in this position will choose to continue carrying out an audit.
A voluntary audit is also still a common part of grant applications and funding, so charities should consider the pro’s and con’s of not being audited should they fall under the increased thresholds. The Trustee’s decision to move away from an audit should consider the legal aspects, their personal attitude to risk and the preference of third party organisations.
Please note, the limits for charities registered in Scotland will remain unchanged. The Independent Examination limit for all UK charities of £25,000 income also remains unchanged.
If you have any doubts whether your charity requires an audit, or would like to discuss your options please contact our team of charity accountants.
Award-winning chartered accountants offering tax, audit and advisory services.