Independent Examinations

This “lighter” touch regime of external scrutiny was brought into being under the 1993 Charities Act. Over the intervening years it’s scope has been extended so that it is now available to many of the charities operating today in England and Wales.

Can all charities have an I.E?

Independent Examination was originally only available for non company charities. However, for accounting periods beginning on or after 1st April 2008, company charities are included as well. Independent Examination is for registered or excepted charities that fall below the statutory audit threshold.

What are the new thresholds for a statutory audit?

For accounting periods ending after 1st April 2009 an Independent Examination can be undertaken up to £500,000 gross income unless the balance sheet value exceeds £3.26m in which case a lower gross income of £250,000 applies. A charity needs only to consider the gross income of the year in question when deciding if I.E is appropriate, but should take advice if there income is close to the limit or regularly crosses the line in either direction.

Is there a deminimus level below which no IE is required?

Yes, that figure is £25,000 for accounting periods ending after 1st April 2009. Trustees may however choose to have an I.E and funders/donors may also require one!

From the same date charities with gross income below the deminimus must still prepare accounts but also don’t need to send them into the Charities Commission unless asked.

Can my charity prepare the simpler “Receipts and Payments” Accounts?

Yes this is an option but only if;

• The trustees agree in a minuted meeting to adopt this method of preparation.
• The charity is NOT a company limited by guarantee.
• The gross income is below £250,000 for accounts ending after 1st April 2009, previously this limit was £100,000.

Receipts an Payments Accounts do not have a prescribed format but the Charity Commission have prepared guidance which can be down loaded from their web site, CC16: Receipts and Payments pack.

I have been asked to be an Independent Examiner but have no qualifications, is this allowed?

The trustees appoint their Examiners and for gross incomes under £250,000 there is no requirement for formal qualifications.

However, the Charities Act states that an I E must be independent and competent, with  the requisite ability and practical experience to undertake this work.

Larger charities must appoint a qualified accountant, i.e. where gross income exceeds £250,000.

TSA recommends that specific training is undertaken by all Examiners. The Practice can advise and train you and there are excellent affordable courses run by the Association of Charity Independent Examiners, the main accountancy bodies and a wealth of information on the Charities Commission web site. Furthermore the ACIE has a progressive Membership system, indemnity insurance scheme and support for Examiners who join them.

Further reading: www.acie.org.uk; www.charitycommission.gov.uk;

Charity Commission Directions : CC32

Further advice: Telephone the Practice on 01844 201887