Audit
and independent examination of charity accounts
The
Act has simplified the basis for determining when a statutory
audit is required for unincorporated charities. It will also
increase the statutory threshold beyond which all charities
are required to subject their accounts to a professional audit.
In future the test will simply be an income and asset test
on the current year. It will no longer be a test of income
or expenditure in the current or previous two years.
There are similar although not identical thresholds for charitable
companies.
An unincorporated charity's accounts will have to be professionally
audited if the charity has:
- gross
annual income over £500,000 or
- an
aggregate value of assets over £2,800,000 and gross
annual income over £100,000.
Below
this threshold an independent examination may be performed
instead of an audit. An independent examination is not required
if the charity's income is below £10,000. Where the
charity's income is above £250,000, the independent
examiner must have an appropriate accountancy qualification.
Charitable companies will be required to have their accounts
professionally audited where:
- gross
annual income is over £500,000 or
- total
assets on the balance sheet are over £2,800,000.
These
changes have already been introduced. They take effect for
accounting periods commencing on or after 27 February 2007.
The Office of the Third Sector has indicated its intention
to withdraw the requirement for charitable companies, with
income between £90,000 and the statutory threshold,
to provide an accountant's report in order to avoid an audit.
Instead the intention is to require such companies to have
an independent examination. Further legislation will be brought
forward in 2007 to this effect.
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C o m p l e t e
Regulated
to carry on audit work for a range of investment business
activities by the Institute of Chartered Accountants in England
and Wales