What happens during a charity audit?

For charities with a gross income exceeding £1m (or £250k + assets over £3.26m), a charity audit is mandatory practice under the Charities Act 2006. Although charity audits are regularly called upon for large high-street organisations, charities of smaller scope have them if specifically detailed within the trustees’ annual report. Furthermore, an independent examination may be required if a charity generates between £25k-£1m in annual income, but more on independent examinations later.

Preparing for a charity audit

Once a charity has established whether they require a charity audit, the first step is to prepare the relevant documents – including the annual return and trustees’ annual report. They must then be filed with the commission; this can be done independently or you can entrust a charity accountant to do it for you. For a detailed guide on how to prepare for a charity audit, read our blog

During a charity audit

On the day a charity auditor is welcomed, they will review the charity’s accounting records, systems, and procedures, along with any tax claims made. Essentially, the purpose is to check for an acceptable `audit trail`, and that all money going through the charity is filed and accounted for. It is a good idea to have all the necessary documents ready (such as accounts, receipts, etc.) before the auditor arrives. For further guidance on what an auditor will look for on the day, you can seek professional advice from a chartered charity accountant

After a charity audit

Charity auditors will talk about the results of the audit on the same day. In the weeks following, the charity will also receive a letter reiterating the results, which may include:

  • Improvements the charity needs to make;
  • Information on overpaid or underpaid tax and how to make it right;
  • Any other `risks` that were found during the audit and how to resolve them.

Entrust an ICAEW & ACCA qualified charity accountant to help you

If you are responsible for preparing an organisation for a charity audit, please get in touch with our highly experienced charity accounting team for no-obligation advice today.