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Independent Examinations

If you need to arrange an Independent Examination of the Accounts for a Charity,  please  call  01206 824464 and we will be happy to discuss your individual requirements with you.

We have provided some guidance below:

The framework for accounting by charities sets out different requirements for different sizes and types of charity.

To understand how it applies to your charity, you need to check:

  • Whether or not your charity is also a company;
  • Its income for the current financial year;
  • The value of its assets;
  •  and Whether or not it is required to be registered as a charity. 

You should then establish:

  • What type of accounts must be prepared;
  • What information is needed in the Trustees’ Annual Report;
  • Whether the accounts need an independent examination, or audit; and
  • What information must be sent to the Charity Commission.

If you do have to send your charity’s Trustees’ Annual Report and accounts to the Charity Commission, you must do so within 10 months of the end of your charity’s financial year.

The information that follows in this summary provides more detail of the different requirements.

Reports, accounts and Returns

All charities must prepare accounts and make them available on request. The duty to file accounts and the Trustees’ Annual Report with the Charity Commission applies to all registered charities whose gross income exceeds £25,000. Charities whose gross income exceeds £10,000 must also send a completed Annual Return to the Charities Commission which can be completed online. These documents must be sent to the Charities Commission within 10 months of the end of the charity's financial year.

Types of accounts Charity accounts may be prepared either on the receipts and payments basis or the accruals basis. Which of these is needed will depend on the income of the charity and whether or not it has been set up as a company: Receipts and payments. This is the simpler of the two methods of preparation and may be adopted where a non-company charity has a gross income of £250,000 or less during the year. It consists of an account summarising all money received and paid out by the charity in the financial year, and a statement giving details of its assets and liabilities at the end of the year. Charitable companies are not allowed by company law to adopt this method.Accruals. Non-company charities with gross income of over £250,000 during the financial year, and all charitable companies must prepare their accounts on the accruals basis in accordance with the SORP. They contain a balance sheet, a statement of financial activities and explanatory notes. These accounts are required in accountancy terms to show a ’true and fair view’.

The Trustees’ Annual Report

 All registered charities must prepare a Trustees' Annual Report and those with a gross income which exceeds £25,000 must file this with the Charities Commission. The basic contents of the Annual Report are mandatory, though smaller charities which are not subject to statutory audit are not required to provide as much information as larger charities which are legally required to have an audit.

The Annual Return

 All registered charities will be contacted by the Commission, shortly after the end of their financial year, and are required, depending on their income, to complete either an Annual Update form or an Annual Return. Charities with a total income exceeding £10,000 are required to complete and submit their Annual Return. Paper copies of the Annual Return are available on request. Trustees are under a legal duty to complete and submit an Annual Return form to the Commission, so that we can ensure that the details on the Register of Charities are as complete and accurate as possible. The Annual Return gives us basic financial details, and details of contacts, trustees, activities and of the charity’s classification.

Audit or independent examination? Except for NHS charities, only those charities with gross income of more than £25,000 in their financial year are required to have their accounts independently examined or audited – below that threshold, an external scrutiny of accounts is only needed if it is required by the charity’s governing document. Precisely what type of scrutiny is needed depends on the income and assets of the charity. Broadly speaking, an independent examination is needed if gross income is between £25,000 and £500,000 and an audit is needed where the gross income exceeds £500,000. An audit will also be needed if total assets (before liabilities) exceed £3.26m, and the charity’s gross income is more than £250,000.

Should you need any help or advice, please  call on 01206 824464 and ask for Tina.