Revised Audit Thresholds
Currently unincorporated charities and charitable companies are required to be audited by a registered auditor if their annual income exceeds £250,000.
The Charities Act 2006 was passed on 8 November 2006 and introduces changes to the thresholds among other provisions. These particular changes are effective for accounting periods beginning on or after 27 February 2007.
These provisions apply to charities in England and Wales, although similar requirements apply to charities in Scotland and Northern Ireland.
In future, unincorporated charities will have to be audited by a registered auditor if they have:
• gross annual income over £500,000; or • an combined value of assets over £2.8 million and gross annual income over £100,000
Below this threshold, unincorporated charities may have an independent examination instead of an audit.
An independent examination is not required if the charity’s income is below £10,000.
If the income is above £250,000 then the independent examiner must have an appropriate accountancy qualification.
Suitably qualified individuals will be:
• A member of a body for the time being specified in section 249D(3) of the Companies Act 1985 (i.e. those qualified to be reporting accountants);
• A member of the Chartered Institute of Public Finance and Accountancy;
• A Fellow of the Association of Charity Independent Examiners.
Charitable companies will need an audit by a registered auditor if the charity has: • gross annual income over £500,000; or • a balance sheet total (aggregate assets) over £2.8 million.
Charitable companies with an income between £90,000 and £500,000 and assets of £2.8 million or less are not required to have their accounts audited if they provide an accountant’s report.
For a charitable company with income of £90,000 or less, then neither a professional audit nor an accountant’s report is required unless its assets are over £2.8 million.
Unincorporated charity
| New rules | |
| Full audit | Income greater than £500, 000 or income over £100,000 and assets over £2.8 million |
| Independent examination | Gross income over £10,000 but under £250,000: independent examination by an independent person with appropriate ability Gross income over £250,000 but under £500,000: independent examination by examiner with specified qualification |
| Total exemption | Income under £10,000 |
Revised Audit Thresholds March 2007 Charitable company
| New rules | |
| Full audit | Income over £500,000 or assets over £2.8 million |
| Group rules for full audit | Member of a non-small group or aggregate group income over £700,000 net (£840,000 gross) or group assets over £2.8 million net ( £3.36 million gross) |
| Accountant’s report | Income between £90,000 and £500,000 and assets less than £2.8 million |
| Total exemption | Income less than £90,000 and assets less than £2.8 million |
The audit requirements for charitable industrial and provident societies remain the same and are determined by the Friendly and Industrial and Provident Societies Act 1968 (Audit Exemption) (Amendment) Order 2006. Similarly, the rules for Registered Social Landlords remain the same and are according to the Housing Act 2004.
