Audit Thresholds on the move for Charities
In line with Lord Hodgeon’s recommendations The Cabinet Office has recently confirmed that it is proceeding with its plans to increase the charity audit income threshold. The income threshold is to be increased from £500,000 to £1million – meaning that any charity with income in excess of £1million will be subject to audit in accordance with the Charities Act 2011, this will also be the level at which parent charities have to prepare consolidated accounts. The second audit test of assets of £3.26million or more and income £250,000 or more is to remain unchanged, this means that certain “asset rich” charities with moderate income levels will remain within audit, the proposal to increase the income threshold for such charities to £500,000 was rejected as this ties into the basis of accounts preparation (Accruals V’s Payment and Receipts) as set into S133 of the Charities Act 2011.
The thresholds for independent examinations have also been kept the same. During consultation some concern was expressed about the independent examination process and the level of assurance that an independent examination provides, it is anticipated that the Charity Commission will issue guidance of Independent Examinations off the back off the concerns raised during the consultation.
Assuming parliamentary approval is granted the new thresholds will take effect for accounting periods ending on or after 31 March 2015.
The Governments full response to the consultation can be found here.