INDEPENDENT EXAMINATION FOR CHARITIES
Charities with income of over £25,000 are required by law to have some form of external scrutiny. Charities with income below £1 million may choose to have a less expensive form of external scrutiny called an independent examination, unless their gross income exceeds £250,000 AND their assets exceed £3.26 million.
Independent examination was originally introduced by Part 6 of the 1993 Charities Act. This is now Part 8 and sections 145 and 152 of the 2011 Charities Act which allow trustees of smaller charities to opt for this simpler form of external scrutiny in place of an audit.
An independent examination provides an external check on the accounts and can be carried out by any person with the relevant ability and experience, except where the gross income exceeds £250,000, when only members of one of the bodies listed in the 2011 Act (see section 3.2) can undertake the examination. Therefore as a member of the AAT I am able to carry out independent examinations on charities with annualincome up to £1 million.
An examination is a less onerous form of scrutiny than an audit and provides less assurance in terms of the depth of work which is to be carried out. What the examiner must do is set out in the Directions made by the Charity Commission and the content of the examiner’s report is set out in the 2008 Regulations. The 2008 Regulations and Directions are mandatory and apply to examinations of both registered charities and those charities currently excepted from registration. An examiner, in their report, is only required to confirm that no evidence has been found that suggests certain things have not been done by the charity. This form of ‘negative assurance’ is a more limited form of scrutiny. The examiner is not acting as an auditor and so is not required to plan their work to identify material fraud or to test the internal financial controls operating in the charity.
An examination involves a review of the accounting records kept by the charity and a comparison of the accounts presented with those records. It also involves a review of the accounts and the consideration of any unusual items or disclosures identified.
As an AAT Qualified Accountant I am legally authorised to carry out an Independent Examination for your charity.