If you are a newly formed charity, or if you have recently joined a charity at a senior level, you may be wondering whether you require an audit by law.

What are the charity audit requirements?

Though high-street charities with hundreds of branches most commonly require routine audits, smaller charities are not exempt from them. To pass the threshold of requiring an audit as laid out by the government’s Charity Commission, your charity will be:
1. A large charity with a high turnover;
2. Or a charity with a trustee who has specifically requested an audit;
3. Or a charity whose governing document states the requirement of an audit.

What is the charity audit threshold?

The charity audit threshold is based on the amount of money a charity makes annually and is calculated by gross income and gross assets. Because predominant charities are generally worth more than smaller ones, this is why they often pass the charity audit threshold, which is:
• A gross income of £1m+;
• Gross assets of £3.6m+ (aggregated with a gross income of £250k+).

Which charities do not require an audit?

As laid out by the Charity Commission under the Companies Act and Charities Act, some smaller establishments with lesser income and assets will not require an audit. This is usually if:
1. The charity meets the Companies Act definition of a `small company`;
2. They do not exceed a gross income of £1m;
3. Their assets are not worth more than £3.6m;
4. If there is no mention of an audit in their governing documents.

Who can conduct a charity audit?

If you are a small company charity operating on a gross income that does not exceed the threshold but you require an audit as per your governing documents, you can have your accounts audited or independently examined by a qualified accountant of your choice under the government’s Charities Act

Charity audit services at Harris Lacey and Swain Chartered Accountants

If you are a charity seeking advice about your mandatory audit, kindly get in touch with one of our experienced accountants here (link).