Changing Charity Audit Thresholds

The audit thresholds for English and Welsh charities have been increased for years ending on or after 31 March 2015, the limits for charities registered in Scotland will however remain unchanged. The gross income requirement for audit has increased from £500,000 to £1,000,000, the asset threshold has however remained unchanged. This means a charity with an income over £250,000 and gross assets of £3,260,000 would still require an audit under the new rules, The Independent Examination limit of £25,000 income remains unchanged.  The Charity Commission has released updated guidance in the form of “Charity reporting and accounting – the essentials March 2015 (CC15c)” which is available to download from here.

In addition to exemption from audit practically, this also means that charities falling outside audit will benefit from reduced disclosure requirements, most notably the requirement to produce group accounts. Part 5 of the 2008 Regulations sets out the requirements for the form and content of a charity’s annual report, which include some additional requirements for an auditable charity; the definition corresponds to that of a ‘large charity’ as used by the 2005 SORP (Statement of Recommended Practice), and both the new SORPs: SORP FRS (Financial Reporting Standard) 102 and SORP FRSSE (Financial Reporting Standard for Smaller Entities). It therefore follows that as a charity falls out of audit, it also falls out of the definition of a large charity and the additional reporting requirements fall away for periods ending on or after 31 March 2015.

Trustees of charities with income under £1,000,000 may of course choose to have a voluntary audit, with many taking comfort from the increased levels of assurance and credibility offered by audited accounts. It also remains true that receipt of audited accounts is a common part of many grant application processes. Existing funders may require an audit as a condition of ongoing funding, equally the absence on audited accounts may prove problematic for those charities seeking and applying for new funding. The Trustee’s decision to move away from audit therefore needs to be a rounded one taking into account the legal requirements, their personal attitude to risk and the needs of third party organisations.


For further information on this subject please contact Laura Harrison

or – 01904 464 100